Question

-What are some of the accounting and audit failures in the early 2000 tyco case

- factors that led to the failure? please be specific, thank you

Answer 1

ACCOUNTING AND AUDIT FAILURES IN TYCO CASE

1. CEO and CFO stole $150m from the company and inflate the income by $500m
2. Money was smuggled out disguised as executive bonus or benefits.
3. The company had "key employee loan" program through which very low or 0 interest loans were being given to its executives
4. Company's CEO and CFO of selling thier company stock without telling investors about the same

FACTORS THAT LED TO ITS FAILURE

1. The "Key employee Loan" program was not accounted for properly and was undisclosed in balance sheets
2. As many as 40 executives loan had been forgiven under this program
3. The CEO and CFO did not take any approval from Board of Directors before taking benefit of the loan program for loans worth more than $120m

Tyco case was more about greed than accounting fraud per say