required 1: using hindsight identify factors present at waste management that are indicative of each of the three fraud conditions: incentives, opportunities and attitudes.
91112014 XanEdu You must be connected to the internet to use XanEdu Reader. CASE 4.4 Waste Management, Inc. Manipulating Accounting Estimates Mum S. BEASLEY - FRANK A. BUCKLESS - STEVEN M. GLOVER - DOUGLAS F. PRAWITT LEARNING OBJECTIVES After completing and discussing this case you should be able to [l] Recognize risk factors suggesting the presence of the three conditions of fraud [2] Identify nancial statement accounts that are based on subjective management estimates [3] Recognize inherent risks associated with accounting estimates [4] Describe auditor responsibilities for assessing the reasonableness of management's estimates BACKGROUND Waste Management, Inc's Form 10-K led with the Securities and Exchange Commission (SEC) on March 28, 1997 described the company at that time as a leading international provider of waste management services. According to disclosures in the Form lOK, the primary source of its business involved providing solid waste management services consisting of collection, transfer, resource recovery, and disposal services for commercial, industrial, municipal, and residential customers, as well as other waste management companies. As part of these services, the company provided paper, glass, plastic, and metal recycling services to commercial and industrial operations and curbside collection of such materials from residences. The company also provided services involving the removal of methane gas from sanitary landll facilities for use in electricity generation and provided Port-O-Let portable sanitation services to municipalities, commercial businesses, and special event customers. In addition to solid waste management services, the company provided hazardous waste and other chemical removal, treatment, storage, and disposal services. According to information in the Form 10-K, the Oak Brook, Illinois based company was incorporated in 1968. In 28 years of operations, the company had grown to be a leader in waste management services. For the year ended December 31, 1996, the company reported consolidated revenues of $9.19 billion, net income of $192 million, and total assets of $18.4 billion. The company's stock, which traded around $36 per share in 1996, was listed on the New York Stock Exchange (NYSE), in addition to being listed on the Frankfurt, London, hnm=IWhieagm-mndlmlss3stoekcxohagmoen http: xl .xanedu .comfcourse,packs{47?293r'articlefa lnavpoint-l 1; ma "Ed 'uqz'l asoH 'Eguromag uraqinos [a Mgsiangu n 'erozraora uo \"M !G [q papeolumog 11'1
