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The Manipulation of Financial Statements to Inflate Profits and Investment: The Examples of WorldCom and Enron
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Business Ethics Essay research papers
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This is a 3 page paper discussing the methods of manipulation of financial statements companies have used to inflate profits. Within the last several years, large multi-billion corporations such as WorldCom and Enron have collapsed due to the misrepresentation of their profits. While misstating profits and earnings, the companies encouraged further investments but in fact were defrauding their investors because investments were made in the companies based on their manipulated financial reports. Manipulation of financial statements came through a variety of accounting methods which relied upon the complex “in process” stages of the multi-mergers and acquisitions of the companies. Overall, methods used for the manipulation of profit reports included “in process” R&D charges, pooling, restructuring reserve, revenue recognition, the use of stock from dummy or affiliated corporations as collateral to secure more loans or investments, and the reporting of future earnings of acquired companies as profits. Because of the misstatement of revenues by both companies however, they are left in financial ruin along with the ruin of their investors, employees, and affiliated businesses.
Bibliography lists 6 sources.
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Pages:
3
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Filename:D0_TJinflt1.rtf |
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Paper Title:
The Manipulation of Financial Statements to Inflate Profits and Investment: The Examples of WorldCom and Enron
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