Corporate Scandals And Allegations Of Fraud

1111 Words Jul 4th, 2016 5 Pages
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 due to their fraudulent activities. Legislative and regulatory reforms by the Securities and Exchange Commission (SEC), National Association of Securities Dealers Automated Quotation System (NASDAQ), the New York Stock Exchange (NYSE) and Congress have been created so history does not repeat itself (Vera-Munoz, 2005). These modifications have redefined the roles, responsibilities and expectations in the financial world. This paper discusses the fraudulent activities that occurred with Enron Corporation, WorldCom, Incorporated, and Global Crossing Limited along with several of the reforms that were created to assist in the prevention of the reoccurrence of corporate scandals and fraud.
Enron, WorldCom, and Global Crossing management had…
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