Based on the information below, Tyco was involved in accounting frauds and violated accounting principles. Discuss the following in context of Tyco: (a) Discuss 3 possible motivations behind accounting fraud. (6 marks) (b) Tyco has violated accounting principles. Which accounting principles were violated? Support your answer with examples. (8 marks) (c) What are the consequences of accounting fraud. (6 marks) (d) Differentiate between accounting fraud and mistake? Explain whether Tyco was engaged in an accounting mistake or fraud. (10 marks) (e) Discuss the difficulties of detecting accounting fraud and the challenges faced by auditors in exposing these fraudulent activities. (5 marks) The Tyco International accounting scandal The Tyco International accounting scandal, which was unfolded in the early 2000s. Tyco, a conglomerate known for its aggressive acquisition strategy, was lauded for its rapid growth. However, senior executives were involved in deceptive accounting practices to artificially boost the company's stock price. CEO Dennis Kozlowski, CFO Mark Swartz, and others were the masterminds behind these fraudulent activities, employing a range of manipulative strategies. These included increasing earnings through accounting techniques like capitalizing expenses and pre-maturely recognizing revenue, thus creating the impression of higher profits. They also concealed massive liabilities through off-balance sheet financing and incorrectly disclosed liabilities. Additionally, undisclosed related-party transactions were used, using off company funds for the personal benefit of the executives while causing substantial harm to shareholder interests. The consequences of the Tyco scandal were profound. Shareholders incurred substantial financial losses as the stock price dropped, reducing billions in market value. Legal actions ensued, with CEO&CFO both convicted and sentenced to prison. Tyco itself faced regulatory penalties and settlements, while the scandal triggered significant reforms in corporate governance standards and reporting requirements. The case exemplifies the importance of transparency, full disclosure, and ethical conduct in accounting information. It also highlights the necessity of regulatory oversight, rigorous auditing practices, and a strong corporate culture emphasizing ethical behavior to prevent such accounting misconduct in the future. The Tyco International scandal serves as a reminder of the critical role accountants play in protecting the integrity of accounting information and upholding investor trust