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What Is Arthur Anderson's Fraud Failure

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of issuing unqualified opinions on the company’s financial statements for 1996 and 1997. Arthur Andersen’s auditors performed some accounting practices that did not comply with GAAP. Philip Harlow was the partner of Arthur Andersen LLC and performed audits for Sunbeam. SEC discovered that there was more accounting practices that were not in compliance with GAAP that Phillip Harlow performed. Professional care was violated when it comes to accounting ethics. He knew about all of the restructuring costs and other improper behavior that was reported on their financial statements. However, he failed to act upon the activities and failed in being professional as an accountant and being an effective leader. It was also discovered that $62 million of the $189 million of Sunbeam income failed to comply with GAAP. In this case, Anderson settled with Sunbeam shareholders for $110 million in 2011. …show more content…

In 2002, WorldCom reinstated their financial statements for 2001. Shortly after that, WorldCom filed for bankruptcy. SEC investigated and found major improper accounting which included overstatement of costs by $958 million and understatement of costs by $7 billion. Unfortunately because of this, WorldCom faced charges of fraud and CFO Scott Sullivan was sentenced for 5 years, Controller David Myers was sentenced for 1 year and CEO Bernie Ebbers was sentenced for 25 years. Worldcom violated the revenue recognition principle by recording revenue entries with no support that the activity is valid. The accounting group of Worldcom performed "close the gap" to hit targeted revenue growth numbers. They calculated it by looking at the difference of actual and targeted

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