Over the last 25 years, corporate accounting scandals have earned front-page headlines. These acts of malfeasance—from Ponzi schemes to income inflation—triggered sweeping corporate finance reforms; the Occupy Wall Street movement; and the controversial U.S. bank bailout following the financial crash of 2008.
But for every financial villain there are accounting heroes – single whistleblowers or investigative teams that are armed with the skills, experience and confidence needed to detect and report fraud.
Check out these five headline-grabbing scandals for insight into how earning as Master of Science in Accounting from American University’s Kogod School of Business can turn you into a fiscal hero.
1. Enron Scandal: How a background in forensic accounting can prevent wide-ranging fraud.
The Story: In 2001, thousands of employees and shareholders of the Houston-based commodities, energy and service corporation, Enron, lost $74 billion in retirement accounts because the company kept huge debts off the balance sheets.
The Forensic Hero: Ultimately, Enron CEO Jeffrey Skilling and former CEO Ken Lay were caught by internal whistleblower and then Vice President of Corporate Development Sherron Watkins. In courses such as ACCT 551 Forensic Accounting: Fraud Examination and Litigation Support, you will explore the nature of financial fraud and learn to identify and deter financial deceptions. You’ll also master examination techniques that experts use to detect fraud before it becomes a financial crisis.
2. Worldcom Scandal: How training in corporate responsibility prepares you to report fraud.
The Story: In 2002, telecommunications giant Worldcom inflated assets by as much as $11 billion through a variety of fraudulent accounting tactics. The unethical behavior led to the loss of about 30,000 jobs and $180 billion in lost revenue for investors. Within weeks of the scandal, Congress passed the Sarbanes-Oxley Act, which introduced a sweeping set of new business regulations that threatened harsh consequences for firms that mimicked Worldcom’s practices.
The Forensic Heroes: Ultimately, Worldcom’s internal auditing department uncovered $3.8 billion in fraud. Courses in ethics, such as ACCT-600 Ethics in Business and Accounting, examine the major ethical issues that face businesses today. With an emphasis on profit motive and public good, social responsibility in corporations, consumer and employee relations, confidentiality, whistleblowing, and advertising and hiring practices, you will complete these courses equipped to put corporate accounting practices to any ethics test.
3. Tyco Scandal: How a background in investigation can prevent financial losses.
The Story: In 2002, the CEO and CFO of the New Jersey based security systems firm Tyco stole $150 million and inflated the company’s income by $500 million by siphoning money through unapproved loans and fraudulent stock sales.
The Forensic Heroes: Ultimately, investigations led by the U.S. Securities and Exchange Commission (SEC) and the New York County District Attorney’s Office uncovered questionable accounting practices. Courses such as ACCT-607 Financial Accounting introduce you to the foundational concepts behind identifying fraud in any corporate setting. You’ll learn about the accounting model of a firm, the financial accounting cycle, and the methods firms use to account for their financing activities. This course is designed to help you understand the diverse roles in the accounting profession so that you will have a firm grasp of the inner workings of the entire practice.
4. American International Group (AIG) Scandal: How auditing skills help identify irregularities that result in fraud.
The Story: In 2005, multinational insurance corporation AIG, engaged in massive accounting fraud to the tune of $3.9 billion, along with bid-rigging and stock price manipulation. CEO Hank Greenberg allegedly booked loans as revenue, steered clients to insurers with payoff agreements with AIG and told traders to inflate the AIG stock price.
The Forensic Heroes: Ultimately, the SEC investigated, most likely tipped by a whistleblower. Electives that focus on auditing standards and practice, such as ACCT-760 Advanced Auditing and Professional Practice, let you examine real-life contemporary issues in the practice of professional accounting. Coursework in information systems audits, internal/operational audits, government compliance audits and international auditing standards will arm you with the skills to identify systematic irregularities that could prevent the massive accounting meltdown.
5. Bernie Madoff: How fraud identity and reporting skills can save thousands from financial ruin.
The Story: In 2008, Bernie Madoff, head of his own investment firm, along with his accountant, David Friehling, and Frank DiPascalli, bilked investors out of $64.8 billion through the largest known Ponzi scheme in history.
The Forensic Heroes: Ultimately, Madoff’s sons reported him to the SEC. Fraudulent ponzi schemes such as the one perpetrated by Madoff and his associates can be prevented through proper detection. In core courses such as ACCT-680 Advanced Forensic Accounting and Fraud Investigation, you will focus on identifying and investigating business crimes with an emphasis on the forensic accountant’s role in uncovering fraud. The skills you gain in fraudulent financial statement analysis, fraud detection using electronic evidence, and legal issues that arise during the investigation may help you win the day.
Do you want to be the next fiscal hero? Consider an MS Accounting degree at American University.