Question

Find a publically traded company that received an unqualified audit report from external auditors and faced accusations of reporting false or misleading accounting information. Next, discuss the departures from generally accepted accounting principles (GAAP) that you have researched, and give your opinion as to whether or not the Public Company Accounting Oversight Board (PCAOB) should levy sanctions against the CPA firm for issuing the unqualified report. Identify the sanctions and section of the report the company should have modified to address departures from GAAP.

Answer 1

Answer

In 1998, a Houston-based publicly traded company, Waste Management INC had reported $1.7 billion in fake earnings, lasting for more than 5 years. The company allegedly, falsely increased the depreciation time length for their property, plant and equipment on the balance sheets. They were eventually caught by the new CEO and management team when they went through an audit and books. They violated, aided/abetted violations of anti fraud, reporting, and record-keeping provisions of the federal securities laws. The company penalties were that they settled a shareholder class-action suit for $457 million and the SEC fined Arthur Andersen $7 million. Since it was the new CEO who discovered the accounting scandal I feel as though he did his due-diligence to the company, society and shareholders.

https://www.sec.gov/news/headlines/wastemgmt6.htm