Accounting can be a very high pressure job. Making one small mistake could have devastating frequencies for the finances of a business or individual. Sometimes businesses actively seek to make, what they later claim to be mistakes, leading to accounting scams and scandals – this is a completely different matter.
Through the last few decades alone there have been plenty of accounting scams and scandals to look at. Here are three of the biggest accounting failures of recent years:
The Enron Scandal – A seemingly prosperous energy company founded in Omaha, Nebraska, USA in 1985. The Enron Corporation went bankrupt in 2001 after 16 years in operation. The Enron Scam included many acts of financial corruption including the inflation of revenue and the hiding of debts – both of which lead to the companies demise. Enron executives were also left to face imprisonment after the scandal was revealed. Whilst one of the world biggest accountancy partnerships Arthur Anderson was lead to dissolution because of their role within the misdealing.
The Parmalat Scandal – In 2003, Parmalat were consider the world leaders in UHT Milk production. However, the same year Parmalat S.p.A were forced to collapse owing to a 14bn ($20bn; 13bn) hole in their accounts. There accounting disaster was not only due to misplaced investment, but also non-existent cash funds, fake transactions and hidden debts.
The Waste Management Scam – Before the dissolution of Arthur Anderson in 2001 they were also fined a whopping $7 million for their role in the scandal of Waste Management Inc. It was in 1998 that Waste Management, a Texas company specialising in (you guessed it) waste management service, were revealed to have undergone an accounting scandal. The had made their after-tax profits look higher by augmenting the depreciation length of their plant, property and equipment. They were forced to pay $457 million to settle the legal proceedings, whilst stock prices dropped dramatically and executives were rapidly replaced.