Case Analysis : Inc Al

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SUNBEAM CORP. Ahmad et al. (2013) indicated that the company created $35 million in inappropriate restructuring reserves in 1996 that were reversed in 1997 to inflate income through ' 'cookie jar ' ' reserves to create fake profits and creating the illusion of a rapid turn-around (pp.8-10). Ahmad et al. mentioned that the company reported a $109 million revenue in 1997, of which over $70 million of revenue from bill and hold sales, channel stuffing by putting inventory onto the books of distributors and retailers and other inappropriate accounting practice, such as, reduction of inventory to fabricate large profits when the goods were sold, recorded some sales that were not real and restated down to $38 million (pp.8-10). Ahmad et al. mentioned that the SEC charged the CEO for violating federal laws by misrepresenting material information and settled by paying portion of the $141 million, while former controller and chief accounting officer each agreed to pay $100,000 in fines, as well as Arthur Andersen settled for undisclosed amount (pp.8-10). CENDANT CORP. (1997) Ahmad et al. (2013) indicated that as a result of the merger of HFC with CUC International and formed Cendant Corp but, it was revealed that CUC overstated revenue by $500 million between 1995 and 1997 (pp.8-10). Crumbley et al. (6 edition) specified that CUC "deliberately and fictitiously" inflated operating income by 50% or manufactured about $500 million in fake revenue (p.3081). Ahmad et al. described that
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