Find the Warning Signs for Choosing the Company Term Paper

Pages: 3 (923 words)  ·  Bibliography Sources: 1  ·  File: .docx  ·  Level: College Senior  ·  Topic: Careers

Warning Signs

Danger! Danger! What were the warning signs for choosing this company as a client?

One of the most publicized corporate ethical scandals in recent memory has been that of HealthSouth Corporation's accounting misdeeds. Over the course of the company's six-year financial fraud, the company recorded 2.7 billion of fake revenues upon its ledges. To accomplish this feat, the company routinely overestimated insurance reimbursements, inflated corporate revenue, adjusted fixed-asset accounts, and improperly booked capital expenses and reserve accounts to create a picture of financial health. Members of HealthSouth's accounting staff also provided the CFOs with false depreciation schedules, which were then used to create fictitious assets on the company's general ledger. One corporate Vice-President, Jason Brown, even created documents to indicate that HealthSouth sold $27 million worth of stock in another company in 2002 rather than in 2001.

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How could this go on for so long, with no one the wiser, or at least, with no one willing to reveal the extent of the crimes that were being perpetuated? The corporate climate at HealthSouth that fostered such illegal activities also created a climate of secrecy and fear amongst the criminals. Breathing a hint of dissent was considered to be a betrayal, not an ethical qualm. The major actors, even those who were friends, lived in a constant atmosphere of suspicion, fear and intimidation. One of CFOs who eventually agreed to inform upon the CEO of the corporation said he was threatened that he would become the 'fall guy' should the company's activities come to light when he wished to quit.

Term Paper on Find the Warning Signs for Choosing the Company Assignment

Ironically, many of the employees outside the financial loop of the company believed that they were working for an ethical firm. But within the upper ranks of the financial personnel, there was a constant 'circle the wagons' mentality as if these individuals belonged to a unique elite, as if their decisions were allowed to transcend conventional ethical standards, so long as profits could be recorded on paper for the good of the company. The same CFO who feared becoming a 'fall guy' stated that even though he knew he was committing a fraud, he felt it was important to keep the stock price up for at least a year, out of loyalty to his fellow CFOs and to the company's leader. At HealthSouth, group loyalty rather than ethical responsibility to the public, much less a higher moral code, held sway.

In addition to a corporate climate within the higher echelons of the firm, another clear giveaway that the firm was suspect was the close personal relationships between the members of the firm, which forestalled ethical judgment in an objective fashion regarding professional, work activities. For example, one CFO, William T. Owens, was godfather to one of Weston Smith's children, another… [END OF PREVIEW] . . . READ MORE

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