So you think accounting is all about sheltering yourself in a cubicle while you watch the world pass you by, right? Until I was introduced to the world of fraud and deceit that shadows many accountants, this is what I thought, too.
My financial accounting professor provided me with a great introduction to accounting practices. However, the most compelling thing I have learned cannot be taught in a classroom.
Accounting scandals are ridiculously interesting. Whether you plan to make money by deceiving others or you want to make sure people are honest to you, familiarizing yourself with different accounting scandals can help you achieve your goal, as well as provide an interesting glance into the world of corporate masterminds.
Accountants are under serious pressure on a daily basis. Imagine accidentally misplacing a decimal point in a companyâ€™s profits. With the dot of a pen $100,000.00 turns into $10,000,000. One small mistake can overstate oneâ€™s profits and have damaging effects on a business.
Spoiler alert: Most people in business are usually in business to make money and will do so by any means necessary.
Although many companies are guilty of fraud, Enronâ€™s extreme dishonesty lends itself to being one of the most impactful accounting scandals to have taken place to date.
To an outsider, Enron appeared to be a wealthy, growing company. Upon further investigation, Enron was found to have committed many acts of financial corruption, including overstated revenue and concealed debt. Enron gave the illusion of gaining money when they were actually losing; stockholders were oblivious and continued to invest â€” an obvious sign of corporate exploitation. Enron housed numerous fictional accounts but still appeared on paper as if they were authentic.
Enron was finally ousted and surrendered its lead to its accounting firm, Arthur Andersen, to also follow in its footsteps of failure.
Accountants are also valuable when needing to learn a lesson in maintaining a good reputation: Donâ€™t associate with immoral and corrupt businesses or people.
Even people with the most sincere looks who bounce around the kitchen in a motherly apron can be guilty.
A more famous case of this exact point involves both your and my cherished and beloved homemaker, Martha Stewart.
Mmmm â€¦ her recipe for Froze-Chocolate-Peanut Butter Pie was so good â€¦ why did she have to go ruining things for me by participating in insider trading?
Insider trading is simply selling or buying securities based upon information obtained that is not yet available to the public. An individual understands when they are involved in insider trading and by participating, run the risk of being caught. Insider trading gives an obvious advantage to those who have this â€œhiddenâ€ information to make money.
After Stewart associated herself with an insider for a company she held stocks in, she learned that this company was about to majorly decline. So, understandably, she sold her stocks. The fact that she knew she was associating with an insider and still completed the sale of stocks puts her in the position of an insider. This, in my mind, is clearly an unethical exchange of power, and she should have been punished as such.
There is no excuse for Stewartâ€™s greed that escalated to result in her prison sentence.
Financial cheating is becoming a standard procedure in businesses. Smart and ethical investors are slowly becoming overpowered by corporate greed.
As students seeking success at a university, we have the right to change the way big business conducts itself. Graduation is right around the corner in May; regardless of whether your dreams range from being a CEO or working as an artist, these scandals can inspire you to work towards an honest goal.
Lydia Jorden is a sophomore business major. Though she claims that there is absolutely nothing wrong with her, she nevertheless actually really loves accounting. Her column runs Mondays in the Collegian. Letters and feedback can be reached at firstname.lastname@example.org.