Corporate Fraud in Richards Letter Essay Example | Topics and Well Written Essays - 1500 words

Corporate wile in Richards Letter - Essay ExampleThe seriousness of Richards action against Richard, as the global betoken of sales, in the Computer Associates Corporation, he was involved in various acts, which affected his responsibilities in the community. One of his actions was the facilitation of an annexe of the fiscal quarter (Soltes 4). This was indeed serious since it affected the reporting of the other fiscal quarters. The effectiveness of the discipline reported by extension of a fiscal quarter would be affected. Richard was also accused of allowing his subordinates to oblige contracts after the end of a fiscal quarter (Soltes 4). This is serious because it will influence the accuracy of the pecuniary reports used by the stakeholders. The accuracy of financial information for the organization is remarkably essential for both the heed and other stakeholders involved such as the investors. Inaccurate financial information may affect the expectations of the prospectin g investors and sh arholders of the organization. It is crack for an organization to give accurate financial information rather than falsehood representation. Information represented wrongly can lead to extortion of investors emanating from misleading financial information. ... Although the actions of Richard emanated from the companys culture of maintaining its performance, the actions of Richard did not follow estimable standards. When proper accounting approaches according to GAAP are used, accurate and efficient financial information is obtained. The pass reason for carrying out investigations on Computer Associates Company was because SEC doubted the accounting reporting of the company. When GAAP approaches are not used in a companys financial reporting, it is most likely that the companys financial reporting would have problems. For instance, one of the GAAP approaches is the matching principle, where revenues are recognized in the period of their earning or in the period when expenses that match the revenues are paid. In Computer Associates Company, on that point was a problem regarding the recognition of revenues. It was noted that just about of the contracts were signed after the last day of a fiscal quarter. This had an impact on the recognition of revenues since revenues obtained from the contracts signed after the end of a trading quarter, could either be related to the first quarter or the following fiscal quarter. Falling of stocks by 42% and bechance in expected financial results in the first quarter of 2001 made SEC notice that some accounting procedures of the company were not proper (Soltes 3). If the company achieved the same accounting results through GAAP, it would have implied that there could be other contributing factors other than the use of wrong accounting principles. For instance, there could be a misappropriation of funds, which could also be investigated by the relevant authorities.