The Accounting Scandal of Healthsouth - Essay

912 Words Jan 21st, 2013 4 Pages
The Accounting Scandal of HealthSouth

HealthSouth Corporation is based in Birmingham, Alabama, it is the largest provider of rehabilitative health care services. It operates in 26 states in the United States of America and in Puerto Rico. HealthSouth provides rehabilitation hospitals, long term heightened care hospitals, outpatient rehabilitation satellite clinics and home health agencies.
HealthSouth was found by Richard Scrushy in the year 1984 and was called Amcare, Inc. It opened its first facility in Arkansas and later on that year another one in Birmingham. In 1985 the company changed its name into HealthSouth Rehabilitation Corporation, in 1990 the company expanded to 50 facilities around the US.
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HealthSouth financial officer William Owens contributed with the securities and exchanges commission and became an informer by recording his conversation with Scrushy to provide the government evidence for their case. In one of the conversation Scrushy said to William Owens that he could get killed if he fixed the financial statements immediately, but this problem could easily be dealt with over time.
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.
On March 31, the board of directors fired Scrushy and Owens and the auditors Ernest & young. The company removed Scrushy’s name from the conference center and hired a restricting firm to help the company to avoid bankruptcy.
As HealthSouth started reviving from the scandal, Scrushy’s problems were only starting. In October of the year 2003 Scrushy faced more than 85 charges, including charges that he falsified accounts at the HealthSouth’s company which lead to $2.7 billion fraud of investors, by reporting conjured…

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