Financial scandals

of the world

Veremeenko
Kateryna
Why bookkeeping? The question is not as
simple as it may seem. Information about
business processes is more reliable and
structured. In addition, the possibility of abuse
and theft is reduced. In theory. In practice, there
are quite a few stories where accountants
occupy dark places that successfully hide all
decreasing amounts.
 Enron
Before the story with Enron, most Americans were convinced that the
built-in system for monitoring the activities of corporate executives was
almost perfect. Several reporting levels, audits, internal financial
monitoring - the credibility of profit indicators was absolute. Therefore,
when it became clear that the management of Enron, with the connivance
of its auditors, had falsified accounting documents and drew non-existent
profits for a decade, it was a real shock. Until now, Enron will be in the top
10 most high-profile financial scandals in the United States.
The main reason for this situation is the
desire of management to receive
bonuses, despite fairly mediocre results.
The largest gas trader in North America
and England for a long time worked at a
loss, although according to financial
reports seen by shareholders and
analysts, revenues grew seven and a half
times. As a result, the value of the stock
soared to $ 90, and the market
capitalization exceeded $ 65 billion.
Almost all of this money was lost by
investors. The founder and the
permanent head of the company,
Kenneth Lay, launched the scheme.
 Olympus
One of the oldest Japanese companies also used very
dubious accounting methods to conceal their own losses.
Unlike Enron, Olympus was able to survive and continue to
work, although it lost 80% of its value. The scandal
undermined confidence not only in the company itself, but
also in the corporate governance system in Japan, which
had previously been considered impeccable.
 WorldCom
Almost immediately after the Enron story, a series of
revelations swept through the United States. The loudest
was the story of the telecommunications company
WorldCom. At one time, this company managed to grow
from a very modest telecom operator in the state of
Mississippi to the second in the long-distance telephone
market. And then followed a real collapse and a major
financial scandal.
In the summer of 2002, management announced that it
was forced to revise previously announced earnings due
to an accounting error. That's just the sum of it was $
3.8 billion. It soon became clear that the financial
director of the company simply transferred part of the
operating expenses to capital investments. After the
investigation, it became clear that in this way he wanted
to hide the losses that the company suffered through the
fault of ex-head Bernard Ebbers, and $ 3.8 billion - this
is far from all. Assets were overpriced by $ 11 billion.
Before the Madoff scam, this was considered the largest
fraud.
The article did not include some other financial scandals
related to losses on the exchange, such as the situation
with Société Générale in 2008, or an outright crime of the
"investment" Madoff fund. Nevertheless, accounting has
practically nothing to do with them. In the first case, the
problem surfaced immediately thanks to accounting, and in
the second, the fund initially forged all the documents.
Thanks for attention!