Analysis Of Fraudulent Activities And Examination Of Failure Of The External Auditor

The Enron and WorldCom scandals were arguably the incidents that permanently changed the procedures for accounting controls. In response to these incidents, the Sarbanes-Oxley Act (SOX) of 2002 was passed. Once the knowledge of these scandals was made public, a number of subsequent accounting scandals were discovered in public companies such as Tyco International, HealthSouth, and American Insurance Group. In addition, a then-employee-owned company, Post, Buckley, Schuh & Jernigan, Inc. (dba PBS&J, now known as “Atkins North America, Inc.”), was also hit by a similar accounting scandal. Henceforth, a case study of PBS&J is presented where we will examine the fraudulent transactions that

One of the main defenses E&Y took during the early stages of the HealthSouth suit was the fact that the SEC had no well-defined rules with regards to audit-related practices. Another defense was the mere fact that E&Y never faced a criminal indictment for the HealthSouth fraud. This was mainly due to the statute of limitations placed on securities fraud. It sets it at the earlier of (a) 2 years after the discovery of the facts constituting the violation or (2) 5 years after such violation. Thus, the DOJ was unable to file criminal charges against the firm because the partner on the audit (G. Marcus Neas) was “unaware” of the fraud in 1993.

Organizational misconduct is the chief cause behind corporate accounting scandals. The trusted executives of the corporation participation in actions during a scandal are corrupt and illegal. In the United States, the Securities and Exchange Commission (SEC) is typically the government agency that investigates such scandals. One of the most notorious corporate accounting scandals in the United States is the HealthSouth Corporation scandal of 2003. HealthSouth Corporation is one of the United States largest health care providers with locations nationwide. A deeper inspection of the HealthSouth scandal is needed to understand how it transpired by assessing how it was executed, the accounting issues and root of the issue, how it was exposed, the results to the company and its officers, and warranted ramifications as an outcome of the scandal.

Richard Scrushy defrauded, stakeholders, stockholders, and the community out of millions of dollars. His deceptive, unethical, and commanding behavior was the stone that caused the biggest misappropriation avalanche of all time. We must consider this question, how is corporate cheating happening and who is heading the deception? Behind every crime, there is a ringleader or a group of individuals "calling the shots." In this case, Scrushy was the one who told his "family meeting members" to "fix" financial records, so HealthSouth to meet or exceed the business financial goals. A person from the beginning may have the objective to cheat; others get sucked into the whirlpool of white-collar crime.

A forensic audit conducted by PricewaterhouseCoopers concluded that HealthSouth Corporation 's cumulative earnings were overstated by anywhere from $3.8 billion to $4.6 billion, according to a January 2004 report issued by the scandal-ridden health-care concern. HealthSouth acknowledged that the forensic audit discovered at least another $1.3 billion dollars in suspect financial reporting in addition to the previously estimated $2.5 billion. The scandal 's postmortem report

Audit failures are unfortunate for any health care organization and failed audits are due to financial statements falling under lack of

As the Chief Nursing Officer of the state’s largest Obstetric Health Care Center, this author is responsible for complaints regarding fraudulent behavior in the center. The purpose of this report is to (1) evaluate how the Healthcare Qui tam affects health care organizations, (2) provide four examples of Qui Tam cases that exist in a variety of health care organizations, (3) devise a procedure for admission into a health care facility that upholds the law about the required number of Medicare and Medicaid referrals, (4) recommend a corporate integrity program that will

The purpose of this paper is to bring awareness to the issue of healthcare fraud and abuse. I feel that healthcare fraud and abuse is one of the biggest issues in healthcare. So, this paper will get everyone to be able to spot fraud before it happens. During, the process you will be able to identify what a person organization did that was fraud or how they abused healthcare rules. This paper will explain to you what exactly healthcare fraud and abuse is and how it affects everyone around us. Throughout this paper, we will examine 3 different articles related the healthcare fraud and abuse and provide a summary and analyze them.

HealthSouth Corporation was one of the largest publicly traded owners of rehabilitative hospitals within the Untied States and paved the way for its industry. However, prior to 2003 the company had a very dark secret: fraud. In 2003 HealthSouth was accused of making $2.7 billion in false journal entries in the company’s system (Helios, 2013). These false entries allowed the corporation to inflate its earnings and revenue. While the corporation was dabbling in a fraudulent, aggressive account system, auditors were unable to detect the extent of the fraud occurring. If not for Michael Vines and Weston Smith, HealthSouth Corporation might have continued its false entries and continued deceiving shareholders and even Wall Street itself. HealthSouth serves as a historical example of how corporate culture can use fraud and deception schemes to not only rationalize what it is doing, which is an element of the fraud triangle, but also encourage fraudulent financial statements.

Rising costs of healthcare is a valid concern for many households in America. A factor in the cost of healthcare insurance is fraud. Fraud is often very difficult to detect. The magnitude of healthcare fraud is unknown. Initial reimbursement and payment and billing timeframe of 90 days allows for fast payment of services, however, many times before there is an indication of fraudulent billing the company has closed up and moved on. Fraud in American healthcare, costs American’s millions perhaps even billions of dollars annually. Without doubt, behind every act of fraud lies a lapse in ethics. This paper will review several pieces of literature to look

Employees at HealthSouth were afraid of losing their jobs, and most of them rationalized the fraud as it is an only small adjustment, it will be okay. Weston Smith, the Chief Financial Officer at the time, was a willing participant in "cooking the books." He rationalized the adjustments as a one-time thing; that was not to happen again. However, his deceitful behavior continued. In the end, his conscious got the best of him and by early 2000s he went to the feds with a personal account of the

The Company provides care to residents under the Medicare and Medicaid programs. Revenue from the Medicare and Medicaid programs accounted for approximately 13% and 12% of the revenue from residential and healthcare facilities for the years ended December 31, 2014 and 2013, respectively. Future changes in the Medicare and Medicaid programs and any reduction of funding could have an adverse impact on the Company. Laws and regulations governing the Medicare and Medicaid programs are extremely complex and subject to interpretation. As a result there is at least a reasonable possibility that recorded estimates will change by a material amount in the near future. The Company believes that it is in compliance with all applicable laws and regulations

Recent changes in our health care reform laws are changing the manner in which health care organizations are reporting finances. “Overall, health care-related items are going to become reportable within one or more financial categories. And that means companies will need to have controls and policies in place around that health care data. Whether companies store it in a human resources application or in a financials package, they need to consolidate that information and put the controls in place to ensure its integrity”. (Capobianco, 2010) Financial reporting is already a well documented in most organizations, however these new reform laws are making the reporting not only a priority but also a necessity and accuracy a must. “It may be cheaper to pay the fines; however, that may not be the best business position to take”. (Capobianco, 2010)

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,

On March 19 of the year 2003, Securities and Exchange Commission brought the trading of HealthSouth to an end on the New York stock exchange, charging the company for inflating its earnings by more than 10 percent and overstated its profits by more than $2.5 billion between 1999 and 2002. HealthSouth’s trading reached to $30.81 in the year 1998, but ever since the trading of the company has been put to an end it reached to $3.91 per share. One week later, Owens pleaded guilty to changing and editing the company’s financial statements.