Waste Management, Inc.

The company’s revenues were not growing fast enough to meet these targets, so defendants instead resorted to improperly eliminating and deferring current period expenses to inflate earnings. They employed a multitude of imp roper accounting practices to achieve this objective. Among other things; the complaint charges that defendants:

The mission Statement for Waste Management Inc. is, “As North America’s leading provider of comprehensive waste management services, our mission is to maximize resource value while minimizing impact in order to further both economic and environmental sustainability for all of our stakeholders”. As one reads their mission statement, a picture of integrity, responsibility, and protection for all their community members comes to mind. Unfortunately, during the years between 1992 and 1997, WM’s management let their greed blind them to these commitments. At which time they started to make fraudulent inputs into the accounting books by inflating salvage values and extending the useful life of the garbage

With different industry definitions and viewpoints, fraud can be a tough issue for audit committee members to grasp for oversight purposes. The legal obligations of audit committee members have intensified because their standard duty of care and loyalty to the entity has increased in light of management fraud activities.

The Waste Management scandal from the late 1990’s was described as “One of the most egregious accounting frauds we have seen," said Thomas C. Newkirk, associate director of the SEC's Division of Enforcement. (Cottrell, 2009) The majority of the fraud was centered around the fact that earnings were not growing as fast as projected so earnings were inflated. Waste Management executives avoided recording write offs which overstated their income statement by failing to record abandoned projects. They also capitalized items that should have been left on the income statement to increase their value on the asset side. It is documented that Waste Management’s auditor Arthur Andersen LLP (Anderson) entered into an agreement with Waste Management to help cover up such fraud in

Patterson and J. Reed Smith, have distinctly observed that once under closely scrutiny, managers inclined to commit fraud included certain weaknesses with their auditing plan. Fortunately, under the Sarbanes-Oxley Act, managers can and in fact penalized for their choice of system control. Moreover, dishonest managers chose a stronger system – this complicates the issue in its entirety as it conveys to the auditor that he is honest. The most interesting aspect of audit risk under Sarbanes-Oxley is: “Finally, audit risk, which is the probability of undetected fraud, goes up with Sarbanes-Oxley, while expected fraud goes down” (Patterson and Read, 429). This implies that a certain weakness exists within the boundaries of Sarbanes-Oxley, a weakness that may not necessarily be easy to locate rather easier to

Prior to making her decision, we believe that integrity and compliance with the law were the ethical issues that Ann Marie must have faced. Integrity is the basic and most important value that is required for the role as an auditor. However, when Ann Marie signed and backdated the audit engagement she was dishonest with herself, the client, and the public. In addition, the purpose of the law is for every audit engagement to be reviewed in detail by a different person to provide quality information for investors and to protect the public interest. Ann Marie did not perform the detailed review, but signed on to the audit engagement in order to fulfill the requirement for the QC Inspection; this action leads her to violate the rule.

This study aims to understand what effect has an ethical framework in accounting. In particular, we examine the influence of ethics on earnings management, financial reporting, and external accounting. Today, the commercial environment reveals the unethical behavior of management and accountants through the manipulation of accounting records to boost the company’s stock price, falsified financial statements to mislead investors, failure of auditors to correct errors and omissions due to client’s pressure and personal material interests.

The accounting profession believes there are three conditions necessary for fraudulent behavior, as well as a responsibility to to perform quality services with integrity, objectivity, and professionalism. Accounting firms have the responsibility to hire and monitor competent personnel, so they can fulfill their assigned responsibilities. This report will explain how all three conditions were present in Anna’s actions, how Max and Company

Waste Management, Inc. (NYSE:WM) is the leading provider of comprehensive Waste Management and environmental services in North America. It is established in 1971 and headquartered in Houston, Texas. In 2014, its total number of employees reached up 42,700 with a revenue of $ 13.99 Billion (Wikipedia 2015). The company provides private and commercial waste services, including collection, transfer, recycling and resource recovery, and disposal services.

Waste Management Inc., hereafter referred to as WMI, was established in 1968by Wayne Huizenga, Dean Buntrock, and Larry Beck. The company provided environmental and waste services in Canada and the United States. By 1990, due to strong growth via operations and acquisitions, WMI grew to become the major waste management company in the region. Unfortunately, actual growth was supported by aggressive accounting policies. However, with the fall of real; growth and profitability, Buntrock and his team started to manipulate financial reports of the company in order to keep its successful appearance (Brook and Dunn, 677).

The WMI accounting fraud case described a financial fraud committed by senior management of WMI during the period of 1992-1997, with the help of Arthur Andersen their external auditing partners. The case depicts the effort of several years to inflate profits at WMI, employing aggressive accounting practices which enabled the WMI to conceal $1.7 billion in expenses (Riley and Rezaee, 12). By eliminating or deferring expenses, WMI managed to meet earnings targets and improve its share value. The fraud enabled the former top officials to enrich themselves in performance-based bonuses. Additionally, the case depicts a financial fraud committed by senior ranking executives at

In the early 1990's, Waste Management, instead of just picking up the garbage, provided garbage to their investors in the form of an accounting scandal which cost investors approximately $6 billion (Bloomberg News) and was described by Thomas C. Newkirk, associate director of the SEC's Division of Enforcement as "one of the most egregious accounting frauds we have seen" (SEC). What Mr. Newkirk is

Since the enactment of the Sarbanes-Oxley Act and the economic downfall following the financial scandals of Enron, Tyco and WorldCom, there has been a heightened expectation fallen upon auditors. The public relies on the auditing profession to detect fraud and material misstatement and potentially prevent economic disasters, similar to what occurred in the early 2000’s. As auditors are required to provide due diligent care to the users/shareholders it is now being suggested by multiple publications that identifying fraud risks during an audit engagement could increase auditors’ liability. Scholars and practitioners have expressed concerns suggesting that the United States legal system in cases of undetected fraud, penalize auditors for investigating fraud risks. And if this to be true, why are auditors’ being scrutinized for simply following auditing standards? SAS no.99 (Statements on Auditing Standards) provides standards and guidance auditors’ are required to follow while considering fraud during a financial statement audit. This includes identifying fraud risks, assessing, evaluating and responding to the identified risks and lastly documenting the considerations of fraud. The article written by Andrew B. Reffett, “Can Identifying and Investigating Fraud Risks Increase Auditor Liability?” examines these liability issues by conducting an experiment that tests whether or not an auditor is liable after

The need for ethical changes in the accounting industry has become increasingly pertinent in recent years. This is due to the rise of fraud in the accounting industry. In a recent survey completed by PwC(PricewaterhouseCoopers), nearly 45% of companies in the U.S suffered from some type of fraud within the past two years (Cohn, 2014). Accounting fraud can attributed to misappropriation of

3. This case introduces some lawsuits for Andersen from its clients, such as BFA, Sunbeam, Waste Management, Enron, and Worldcom. Those proceedings had a huge negative influence on Andersen, specifically Enron's, which is deadly strike. 4. In the end, Andersen agreed to cease auditing public corporations by the end of August in 2002, essentially marking the end of the ninety-year-old accounting institution. At the end of this case, Andersen has received his well deserved punishment. What is more important, Who was the mastermind making so much fraud? Maybe it’s just some people’s faults. However, the main reason is from its degenerative corporate culture that places great emphasis on placing huge profits ahead of ethics and laws. Unfortunately, the life of staffs in the accounting firm were affected pessimistically by all of the events associated with this case. Furthermore, this ethical misconduct caused the loss of the public. Accordingly, no matter who we are, the CEO, the CFO or employees, we should keep something in mind that accounting ethics is significant not only for everything and everyone in the company but also for the