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ACC 651 - Accounting Fraud.

Examples of Accounting Fraud

  • Merging short and long term debt into one amount to improve the perceived liquidity of the company
  • Failing to disclose risky investments or “creative” accounting practices
  • Over-recording sales revenue
  • Under-recording expenses (i.e. depreciation expense)

Getting Started

1) Pick your public company.

2) Search for articles around the time the fraud was reported in the news.  *Look for names, dates, and information about the case*

3) Look for company information.

4) Look for legal information.

 

Article Databases

Articles about fraud include names of key individuals and case names.  You will want a balance of news articles and more analytical or reflective articles from scholarly journals.

Look for articles & reports on companies that include "SWOT Analysis" or "Company Overview."

Selected Fraud Cases

  • Adelphia
  • AIG - Accounting of structured financial deals
  • Autonomy Corp (subsidiary of HP)
  • Bernard L. Madoff Investment Securities LLC - Ponzi scheme
  • Chiquita Brands International - Illegal payments
  • Freddie Mac – Understating earnings
  • Halliburton – Improper booking of cost overruns 
  • HealthSouth Corporation
  • Homestore.com - Improper booking of sales
  • KMART - Misleading practices
  • Lehman Brothers – Failure to disclose an accounting maneuver that resulted in short-term loans being reported as sales
  • Merck & Co. - Recorded co-payments not received
  • Merrill Lynch - Conflict of interest
  • Peregrine Systems - Overstated sales
  • Sunbeam - Overstated sales and revenues
  • Tyco International
  • WorldCom - Overstated cash flows
  • Xerox – Falsifying financial results for five years, boosting income by $1.5 billion