Read an article on New York Times by Kurt Eichenwald on March 27, 2002 and answer questions. Waste Management Executives Are Named in S.E.C. Accusation The Securities and Exchange Commission filed a civil complaint yesterday against six former officers of Waste Management Inc., providing new details of the accounting fraud case that has become a driving force behind the government's criminal action against Arthur Andersen. The complaint portrays a multiyear effort to inflate reported profits at Waste Management using accounting tricks that allowed the company to hide about $1.7 billion in expenses from 1992 through part of 1997. And, year after year, the complaint says, Arthur Andersen accountants complained about the efforts but still approved the company's financial statements when their objections were effectively ignored. The complaint named the most senior officers at the company during most of the 1990's, including Dean L. Buntrock, Waste Management's founder and former chairman; Phillip B. Rooney, who served as president, chief operating officer and later chief executive during part of the relevant period; and James E. Koenig, the former chief financial officer. The others named are Thomas C. Hau, the former chief accounting officer; Herbert A. Getz, the former general counsel; and Bruce D. Tobecksen, the former vice president for finance. The complaint contends they received tens of millions of dollars -- through stock options and bonuses -- that they would never have received if the accounting fraud had not taken place. The suit seeks to force them to pay fines and return money they received unjustly. It also seeks to bar them from serving as officers or directors of public companies. Through their lawyers and in written statements, the named executives vehemently denied any improprieties, saying they had never taken any accounting actions that were not appropriate and approved... "I firmly believe that, while under my watch, all of Waste Management's financials were fairly reported and in compliance with generally accepted accounting principles," Mr. Buntrock said in a statement. "I was never told otherwise, either by our internal accountants or our outside auditors." While technical, the scheme described in the complaint was surprisingly simple: numbers for expenses at Waste Management became almost magical things, appearing and disappearing at will for the purpose of reaching preset earnings goals. For example, the complaint says, the company avoided depreciation expenses for its garbage trucks by extending their estimated life while simultaneously making unsupported increases in their salvage value. "In other words," the complaint says, "the more the trucks were used, and the older they became, the more the defendants said they were worth." Questions: 1. Please identify five accounting terms you have learned in this course and appeared in this article. For example, "expenses" is one accounting term. However, "Money" is not one. 2. Why the Waste Management Executives were named in S.E.C. accusation? 3. According to S.E.C. complaint, what was the accounting trick that Waste Management Inc. did with its garbage trucks? 4. Assuming Waste Management Inc. used the straight-line depreciation method, how did the accounting trick you had identified in question 3 relate to the reported profits of Waste Management Inc.? Page 1 of 1