Accounting Scandals: Enron, One Tel, China Medical Technologies

Table of Contents
Executive Summary............................................................................................... 2
Introduction........................................................................................................... 3
Discussion and analysis......................................................................................... 3
Enron – USA........................................................................................................ 3
One Tel Company – Australia..............................................................................4
China Medical Technologies – China...................................................................6
Conclusion............................................................................................................. 7
References............................................................................................................. 8

Executive Summary
A report has been prepared on the topic of accounting scandals which have
grown over time and have shocked the accounting world off late. Since the
2000s, many large corporations have collapsed and even been liquidated due to
corrupt business practices on account of greed and personal benefits. The
assignment seeks to investigate 3 such companies being Enron in USA, One-tel
in Australia and China Medical technologies in China. The assignment highlights
the irregularities which perpetuated over time, the reasons behind the same,
why these issues were not highlighted by the auditors, what should have been
the ideal course of action by the auditors and what actions should have been
taken by the regulators in the company to address these issues. The assignment
also shows the widespread impact which these scandals have had on the
accounting world and investors as a whole.

Introduction
Amidst the rise in the quantum and intensity of the accounting scandals, it
become very important to understand how the same can be controlled and how
the shareholders and investors can be prevented from being victimized. The role
of internal management as well as the auditors becomes very important to
highlight such issues and irregularities in time such that the frauds and
mismanagement can be avoided (Alexander, 2016). One of the reasons for all
these scams and bad business practices is competition from the peers as a result
of which expectation rise from the companies and thereby these companies
which are not able to meet the expectations on sustainable basis, ride on
irregularities and fraudulent accounting practices to meet their goals. This has a
widespread impact on the corporate governance and sustainability of the
companies and confidence of the investors as a whole. There is therefore a need
of corporate governance practices where stakeholders carry the business
operation in an efficient and effective manner. Many of the bug companies like
Enron, WorldCom, HIH Insurance, One Tel Company have all set a bad example
for the small ones as all of them went into liquidation following huge drop in the
share prices.
Discussion and analysis
Enron – USA
Enron was one of the energy, natural gas, communication and Services Company
based out of America. It was named the most innovative company for a period of
6 consecutive years and employed around 29000 people. However, in the year
2001, it was revealed publicly that the company was financial condition of the
company was sustained by systematic and creatively planned accounting fraud
which then came to be known as Enron scandal (Defond & Lennox, 2017). The
company had to be liquidate because of the same and since then it has become
an example of fraud and corruption. It is because of this company that the
accounting practices of many large corporations in USA came into question and
that led to the enactment and emergence of Sarbanes Oxley Act, 2002. The
scandal also led to the dissolution of the firm of its chief auditor Arthur Anderson
which had been the auditor of the company for many years.
Enron was considered to be one of the most innovative company of the times in
America but once it met the financial crises due to the accounting scandal, it