Case 4.4 Waste Management

3699 Words Mar 14th, 2013 15 Pages
Waste Management, Inc.

Waste Management, Inc., incorporated in 1968, had become a leader in the industry of waste management services ranging from industrial operations to curbside collection. This company had become synonymous with many different kinds of disposal services that allowed for the company to grow and grow with a solid base over the course of twenty-eight years. Finally in 1996, the company reported total assets of almost $20 billion with net income close to $200 million. However, even with this growth and solid base, the company was feeling competitive pressures and net income was on the decline. Everyone from local to national collection companies were now charging less to the customer and this was taking a major
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While Waste Management continued to produce false numbers to the public, Buntrock used company money to make charitable contributions and present himself as a decent, ethical person (Securities and Exchange Commission: 2002). He received large amounts of money while he perpetrated the fraud, and his executive team was incentivized for their role as well. Opportunity
At the time the fraud existed, internal controls were almost non-existent. The management team employed a number of improper accounting practices that did not comply with GAAP. As stated earlier, CEO Dean Buntrock not only allowed internal controls to be bypassed, he encouraged them to be ignored and shaped accounting policy with the sole purpose of making the targeted earnings numbers every year. The auditing firm, Arthur Andersen, LLP, was also shown to have complicity. The partners at Andersen knew that the company’s policies were not compliant so they provided Waste Management with proposed adjusting entries to their books. Waste Management refused to make the adjustments so Andersen had Waste Management sign off on a list of 32 steps the company must do to change its practices. The document legally constituted an agreement among the two parties and clearly shows that Andersen was aware of fraud that Waste Management had covered up in the past. Furthermore, Andersen did not stand up to the company and continued to

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