The Pbs & J Accounting Scandal

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CASE STUDY: THE PBS&J ACCOUNTING SCANDAL Introduction 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…show more content…
During the time of the scandal, which broke in mid-2005, PBS&J had 4,000 employees in 75 offices in 24 states (Barnett, 2007). A number of high-profile projects were under construction with FDOT, OOCEA, and TxDOT. The funds from these projects were being brought into the firm at a rapid rate; however, PBS&J contained a flimsy internal controls system which facilitated the embezzlement that eventually took place. The major players of the scandal were located in the firm’s Miami office. They were Scott DeLoach, then chief financial officer (CFO); Maria Garcia, an accounting employee who was in charge of the office’s database and bank reconciliations; and Rosario Licata, a bookkeeper who maintained the firm’s benefits bank account (Eubanks, 2016). Garcia and Licata took a number of old invoices and issued checks in the invoice amount, subsequently cashing the checks and splitting the amount between themselves. DeLoach soon after joined them and deposited a number of checks, issued by Licata, into various personal accounts throughout Miami. DeLoach used the funds from the fraudulent checks to write checks to Garcia and Licata (Barnett, 2007). DeLoach, a trusted member of PBS&J’s senior management staff, was appointed as the treasurer of the board in 2003. According to Barnett (2007), “That
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