Irregularities in accounting

In the early 2000s, several large corporations such as Enron, WorldCom, and Nortel collapsed because of corporate greed, bad business practices, and accounting irregularities. Others, such as Bristol-Myers Squibb, Xerox, and Harris Scarfe, were forced to restate their earnings, in some cases over a number of years, because of inflation of sales and other accounting irregularities.

Required

Investigate two of the above companies in depth and determine how the irregularities were perpetrated and the reasons behind them. Also determine, to the extent possible, why these irregularities were not found by the auditors during their audits of sales revenue and receivables, and other related areas of the audit.

1.Adapted with permission of the Chartered Professional Accountants of Canada, Toronto, Canada. Any changes to the original material are the sole responsibility of the publisher and have not been reviewed or endorsed by the Chartered Professional Accountants of Canada.

2.Adapted and reprinted with the permission of CPA Ontario. Any changes to the original material are the sole responsibility of the author (and/or the publisher) and have not been reviewed or endorsed by CPA Ontario. Copyright Chartered Professional Accountants of Ontario (The Institute of Chartered Accountants of Ontario).