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Review Business in Action 1.3 Why would the companys former employees improperly record information as described here? Production Firm Employees Charged with Fraud The Securities

  1. Review Business in Action 1.3 Why would the companys former employees improperly record information as described here?image text in transcribed
Production Firm Employees Charged with Fraud The Securities and Exchange Commission (SEC) filed three actions against Diebold, Inc., a manufacturer and seller of automated teller machines, for improperly inflating earnings over a five-year period. Three former employees-the CFO, controller, and director of accounting-were accused of improperly inflating revenue on actory orders, improperly recognizing revenue on a lease transaction, manipulating reserves and accruals, mproperly capitalizing expenses, and improperly increasing the value of inventory. These actions allegedly esulted in over 40 misstated annual, quarterly, and other reports filed with the SEC, along with numerous naccurate press releases. The company agreed to pay a $25,000,000 civil penalty, and the three former employees remain in litigation. Although the CEO was not accused of wrongdoing, he settled with the SEC and agreed to pay back cash bonuses, tock, and stock options received during the periods when the financial fraud was committed. Source: Securities and Exchange Commission, "SEC Charges Diebold and Former Executives with Accounting =raud," news release, June 2,2010

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