An Incident of Fraud in Xerox Corporation

In the later part of 1990s, there was an epidemic of accounting scandals which arose with the disclosure of financials transgressions by trusted corporate executives. The misdeeds involved misusing or misdirecting funds, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, and overstating of revenues.

Imagine over $60 billion of shareholder value, almost $2.1 billion in pension plans, and initially 5,600 jobs - disappeared (Associated Press, 2006). One would have to wonder how that is possible. These are the consequences the investors and employees of Enron Corporation endured after the Enron scandal started to unravel. This paper will focus on the infamous accounting scandal of Enron Corporation. It will also discuss how the company was able to fool investors by producing misleading financial statements, why they were not caught sooner, and new regulations enacted in response to the scandal.

The Enron scandal was one of the most notorious bankruptcies of all time. Many people know about the energy titan’s downfall but less realize that it was also one of the biggest auditing blunders in American corporate history, leading to the dissolution of the Arthur Andersen LLP, which at the time was one of the five largest auditing and accountancy partnerships in the world. The most intriguing aspect of this case is that Andersen was eventually cleared by the United States Supreme Court, yet the company still failed to live on due to its tarnished reputation stemming from its unethical behaviors. The pressure to generate revenue for clients while simultaneously auditing their books became too large a burden for the firm and they eventually resorted to unethical means to achieve their objectives. The demise of the Andersen accounting firm shows the true importance of practicing good ethics and maintaining a good reputation amongst peers; the vitality of the business could depend on sustaining a clean image in the ever-changing business world.

The accounting irregularities increased fiscal year 1997 pre-tax earnings by $405 million, 1998 pre-tax earnings by $655 million, and 1999 pre-tax earnings by $511 million. Xerox's senior management was aware of the accounting actions that were taken to meet revenue and profit goals.

There was not enough news on recent data breach with WLAN that could be found in the internet. The one that I could find was of TJX Companies Inc data breach in 2007 through WLAN. TJX Companies Inc. is American apparel and home goods company, the parent company of TJ Maxx, Marshalls, Office Max, that was founded in 1956 in Framingham, MA. The data breach of this company was the one of the largest data theft which compromised 45 million credit cards. According to the company news release in January, 2007, a data breach was occurred and thieves accessed to credit card information stored in the company network. On the same month, many banks reported that there was increase fraud incident linked which not only had US transaction but also included foreign transaction. Entire data breach that happened was done in such a complicated way that not only the credit card information was sold online but also was used also used carefully to launder the money. How the data breach occurred was the question for everyone.

When Anne was appointed as the new CEO of one of Americas most successful Corporations, she was the difference between survival and filing for bankruptcy. This was a lot for Anne considering the fact that she was just thrown in there without much knowledge or understanding on what needed to be done. But, instead of walking away from the company that gave her so much, she stepped up to the plate and planned to lead Xerox through the “perfect storm.”

This research conducted on the investigation of a world wide known company WorldCom, a company that had stolen billions in dollars from investors, competitors, and employees financial, to help live the senior managers lives more luxurious. This research paper will go more in depth to why the CEO Bernard Ebbers and the CFO Scott Sullivan committed financial statement fraud to benefit themselves. This will tell us behind the scenes of the investigation conducted against WorldCom and the consequences suffered to those who committed and helped with the fraud and how to this day WorldCom is still successful.

In recent years, the practice of creative accounting by the management of large listed corporation in the UK has received increasingly more attention and allegations, especially from key financial information users. Supported by significant evidence of the practice of creative accounting, it is largely believed that such practices misrepresent the underlying reported financial performance of firms, instantaneously conflicts key core aims of accounting – to provide consistent and comparable information to users.

The questions posed by Hanson to Price use a scandal involving financial fraud in WorldCom to find out what measures can be taken now to prevent a similar scandal from occurring again. WorldCom “used shady accounting methods to mask its declining financial condition by falsely professing financial growth and profitability to increase the price of WorldCom's stock” (JJ, Yahoo Contributor Network). Dave Price explains that part of the problem that led to this scandal was the instability in the so-called “corporate culture” in which the lower-ranked employees’ opinions on ethics are not given as much credibility and worth as they should and where there is an

There is no such thing as a perfect business. Although many enterprises express the illusion that they internal workings are flawless, the majority of them are being torn apart from within. This can be through many different ways, but all end in a hefty court case, possible bankruptcy or similar punishments which are associated with financial crimes. One such crime is the manipulation and misrepresentation of financial statements of a business, to hide expenses, improve earnings per share (EPS) or to attract new investors. This is known as financial statement fraud or colloquially labelled “cooking the books”. (Grossman St Amour, 2014) These crimes can have a significant impact on the business, as their stock could be driven

This would be led largely by the enormous profitability experienced by swelling corporate entities and multinational conglomerates. And at the height of this period of economic dynamism, it did appear that these corporate entities were leading the charge toward a new national prosperity. Sadly, the decade immediately thereafter would prove much of this unbridled success to be manufactured and much of the profit to be totally false. Faulty accounting practices would be revealed as a most insidious culprit as a mountain of corporate scandals became apparent in the early 2000s. Certainly, none of these accounting scandals was quite as visible as the collapse of Enron and its accounting partner, Arthur Andersen. The events of 2002 would begin the uncovering of a world of malfeasant practices and would demonstrate the need for far greater transparent, oversight and legislative intervention. The discussion here considers the accounting system at Enron and how this produced an environment where fraud, embezzlement and deception were a part of the company culture.

In 1938 to 1970s, Xerox was the strong company about printer, however, in 1980s the printer business had new competitors, from both the US and Japan. The Xerox 's analysts found management failed in company strategic direction that lead to high cost operation and low quality in comparison with competitors. As Dragolea and Cotirles (2009) suggested there are three main factors that needs to implement. There are supplier management system, inventory management and manufacturing system. In order to change their new design, regards to Xerox leaders use technics and tools of six sigma, benchmarking and market trend to help company make-decision.

Given the pervasive adoption of financial and regulatory compliance globally specifically in the areas of accounting, operational risk disclosures and significant organizational events, the organizational climate is becoming increasingly conducive to ethical behavior. It's not that corporations have had any type of epiphany that being more transparent with their financial reporting or managing of events is virtuous. Rather, it is the accumulated accountability, precisely defined series of personal responsibility requirements that the Sarbanes-Oxley Act of 2002 (SOX) and other comparable laws have placed in corporate officers requiring their organizations stay in compliance (Zimmermann, 2005). With corporate officers being held accountable for the accuracy, fidelity and veracity of accounting and financial management statements, the current business and regulatory environment continues to prove conducive to more ethical behavior. With the U.S. Government and other nations' governments enforcing greater levels of accounting and financial reporting compliance through fines and potentially limiting market access, senior management teams and boards of directors are highly motivated to comply and reduce potential fees, fines and public attention to financial mismanagement. One of the most visible deterrents to unethical accounting and financial reporting activity is when shareholders are compensated for

When analyzing Xerox’s performance in the past, we choose to use the profitability, liquidity and the solvency.

Corporate scandals and accusations of fraud have amplified intensely over the last decade. The cost of fraud has reached over $400 billion dollars a year, not to mention the loss of investments and jobs. Corporation fraud involves creative, complex methods in which to overstate revenues, understate expenses, over value assets, and underreport liabilities. To hide financial problems, management will manipulate stock prices, minimize taxable income, and maximize compensation. “It 's been my experience… that the past always has a way of returning. Those who don 't learn, or can 't remember it, are doomed to repeat it” (Berry, p. 417, 2009). Enron Corporation, WorldCom, Incorporated, and Global Crossing Limited all claimed bankruptcy