Adelphia Communications Scandal

An implicit theme of this case that I want students to recognize is the contrast between the persistent and vigorous efforts of David Sokol to “get to the bottom” of the suspicious items he uncovered in JWP’s accounting records versus what Judge William Conner referred to as the “spinelessness” of JWP’s auditors. The JWP audits were similar to most problem audits in that the auditors encountered numerous red flags and questionable entries in the client’s accounting records but, for whatever reason, apparently failed to thoroughly investigate those items. On the other hand, Sokol refused to be deterred in his investigation of the troubling accounting issues that he discovered. The relationships that existed between members of JWP’s accounting staff and the Ernst & Young audit team apparently influenced the outcome of the JWP audits. Of course, the Sarbanes-Oxley Act of 2002

In the March of the early 2000s, Adelphia officials was charged with stealing on what could be classified as a “grand scale” event. Around that same time, the company

The second ethical problem in this case relates to the Rigas family’s use of publicly-held corporate funds as a personal “piggy bank.” The Rigases used the company jet for personal reasons “without approval of the Board of Directors”, on one occasion flying to Africa for a safari (Markon & Frank, 2002). On another, one of John Rigas’ sons used a corporate jet to pick up an actress friend of his (Grant, Young, & Nuzum, 2004). The former CFO claimed that Adelphia’s funds were used by one of Rigas’ sons to buy a condominium, and to build a $13M golf course (Grant, Young, & Nuzum,

The introduction chapter of this paper presents next the research questions, the methods of the research and then an overview of Deloitte. The second chapter is concentrated on the Sarbanes-Oxley Act evolution, composition and theoretical framework. The third chapter presents the empirical research process and finally, the fourth chapter contains the results of the research and provides the analysis of the selected data.

The purpose of this paper is to discuss the SEC’s influence on auditing a private company and the essential activities involved in the initial planning of an audit. Next the discussion will delve into four stages of the audit and tasks performed by the auditors as well as internal control findings and various aspects of the audit.

Businesses, investors, creditors rely on accounting ethics. The accounting profession requires honesty, consistency with industry standards, and compliance with laws and regulations. The ethics increase the responsibility and integrity of accounting professionals, and public trust. The ethical requirements influence the management behavior and decision-making. The financial scandal of Enron and Arthur Anderson demonstrates the failure of fundamental ethical framework, such as off-balance sheet transactions, misrepresentation of financial statements, inaccurate disclosure, manipulations with earnings, etc. The confronted accounting profession and concern for ethics in businesses forced regulators to revise the conceptual framework of accounting processes.

The auditing firm has been in engagement with the company throughout the period when the fraud was being committed. One of the common and clear indicators of possible fraud was the company’s cash flow statement. The company experienced positive growth in its profits from the year 1996 through to the year 1998. However, a close analysis of the cash flow statement shows that the company had experienced negative figures of cash flow from both operating and investing activities and positive cash flow from financing activities which would not sufficiently offset the negative cash flows from operating and investing. It is therefore evident

It is a relevant ethical dilemma because it is a situation in which an ethical decision needs to be made by a businessman (CFO of Gabriel Resources) where viable options to this case are available which will be judged further in this essay by applying ethical theory and concepts.

2. Ethical Issues in Business. It seems that every day in the news we are hearing of new company that has acted at least unethically and possibly illegally in the operation and financial reporting of their company's business dealings. There are many ethical issues in business. One major issue that we see is over and under reporting net income. Companies like to show that every quarter the net income of the business has an increase or profit. In order to show this they adopt unethical or illegal means in the operation and financial reporting. One such method is the indiscriminate use of stock options for employees that enable companies to take employment costs off balance sheet and inflate earnings. With the recent ethical issues we have

Fraudulent, erroneous, and illegal acts committed by a public company, usually at a managerial or executive level, have been a very serious problem for many years and have prompted development of strict and updated regulations, such as the Sarbanes-Oxley Act, in an attempt to prevent these occurrences. Unfortunately, these new or updated regulations are not enough to prevent these acts from happening, thus not alleviating the auditors of their responsibility to detect fraud. Some methods that management and auditors can employ to prevent and detect fraud, errors, and illegal acts are: improving knowledge, improving skills,

Ethical and legal obligations apply to all members of society. As one in society, the obligation to act in an ethical, law abiding manner on a daily basis is vital to the integrity of daily life. Many professions have their own code of ethics. Financial reporting is not exempt from such ethical and legal standards. One’s lively hood depends on decisions made in the business world. Business transactions are done daily and can impact one’s economic stability. Trust is placed in the hands of corporate America and an obligation of financial reporting to reveal a complete honest and legal picture of an entity’s accounting practices is important in attaining trust. This paper will discuss the obligations of

As the turn of the 21st Century evolved, it appeared as if Adelphia Communications Corporation was on a direct path of success; unbeknownst to their investors and the public, they were in reality on a direct path of destruction instead. Unfortunately, Adelphia is not the first major company in the history of the United States’ business world to lose the trust of the American public, but it is certainly one of the most notable ones to do so. As the events surrounding the Adelphia scandal unfolded in full view of the public eye, a multitude of media outlets were there to broadcast the destruction and distrust to the masses leaving many wondering if the term “business ethics” was actually nothing more than just an oxymoron. Throughout this

According to Milton Friedman, "stockholders are the owners of the corporation, and hence corporate profits belong to the stockholders. Managers…have a moral obligation to manage the firm in the interest of the stockholders" (Friedman 45). Adelphia was managed in such a way that it was not in the stockholder's interest, in fact, it was only managed in the interest of the Rigas family. It is wrong to harm the stockholders because they have entrusted the company with their money with an expected return and maybe an

According to Bar Council of view, the action of John Rigas led it to conflict of interest between Rigas family and stakeholders of the company. The conflict of interest the company faced was how the company choose to staff its Board of Directors with family members and close family friends. As we can see, 60 percent of voting shares of company are held by Rigas family including John Rigas, sons Michael, James, and Timothy, and son-in-law, Peter Venetis. Although there is no restriction prohibiting family members from being on the board of directors, this usually is not advised. This is because

money to build a golf course and club house for exclusive family use all from