Waste Management Case Study

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Waste Management Case Study April 24, 2010 Introduction: Ace Scavenger Service began its journey as a small, family owned trash hauling business in 1894. The family business was passed to Dean Buntrock in 1956. Buntrock had the foresight to begin consolidating small trash companies into one large company. He started with the merger of his firm with two other smaller firms in 1968 and created Waste Management, Inc. In 1971, Waste Management, Inc. had its initial public offering and used those proceeds, and some questionable business practices, to take over their competitors. It was a great time to be in the garbage business as throwaway items and containers began to become more and more common and the trash business was also…show more content…
The audit team documented its observations and quantified the resulting misstatements. Their audit paperwork classified Waste Management, Inc. as a “high risk client” partially due to the misstatements on its books, but also because of Buntrock and his team making “geographic” adjustments in the last quarter of the year to force the financial statements to meet previously stated profit expectations. Each year the auditing team presented Waste Management with “Proposed Adjusting Journal Entries” to bring the statements into compliance with GAAP. Waste Management refused to make the adjustments, yet Arthur Andersen still issued the statements with an unqualified opinion. In 1993, after having audited the year end financials, Robert Allgyer, the engagement partner for Arthur Anderson, was reluctant to issue an unqualified opinion on the statements because of these questionable practices. He was overruled by the head office of Arthur Andersen. However, Allgyer did create, and have Waste Management officials sign off on, a list of actions steps that were to be taken to bring the records back into compliance with GAAP policies. This promise was not kept and the following year, the same problems were found. Again the promise from Waste Management to change its practices, another unqualified statement was issued and the matter was closed for another year. After a few years, the accounting firm of Arthur Andersen did not even
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