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Fraud in Public Companies - Enron, WorldCom, etc.
Posted on 7/19/26 at 7:25 am
Posted on 7/19/26 at 7:25 am
A bit of an off topic but feel this is an appropriate place to get a broader perspective. I remember hearing about WorldCom, Enron, HealthSouth, etc and it seemed like there was a window of time where a large number of big public corporations were committing big time fraud. Yet you rarely hear about anything like that anymore.
Am I just paying attention less? Or have audit regulations and accounting rules been that effective since that era?
Am I just paying attention less? Or have audit regulations and accounting rules been that effective since that era?
9
Posted on 7/19/26 at 7:52 am to CalcuttaTigah
Fraud will always be present when greed and self enrichment is a carrot.
It’s not at the same scale as before Sarbanes Oxley. The threat of jail time can help get your morals in line.
It’s not at the same scale as before Sarbanes Oxley. The threat of jail time can help get your morals in line.
Posted on 7/19/26 at 8:23 am to CalcuttaTigah
Controls in public companies are generally quite high. People that want to be fraudulent are more likely to find lower risk avenues….private companies or dealing with government (e.g., Medicare uncoverings as of late).
Posted on 7/19/26 at 8:34 am to CalcuttaTigah
Just take one look at crypto companies, they are literally designed to enable fraud. Everyone in that kind of business transitioned to crypto companies over the last decade
Posted on 7/19/26 at 9:09 am to CalcuttaTigah
quote:
A bit of an off topic but feel this is an appropriate place to get a broader perspective. I remember hearing about WorldCom, Enron, HealthSouth, etc and it seemed like there was a window of time where a large number of big public corporations were committing big time fraud. Yet you rarely hear about anything like that anymore. Am I just paying attention less? Or have audit regulations and accounting rules been that effective since that era?
Just different tactics. But IMO there is more fraud going on in the US than any other time in history.
Posted on 7/19/26 at 10:55 am to CalcuttaTigah
Because of those three companies, Sarbanes-Oxley was created. Within the SOx act, the PCAOB (Public Company Accounting Oversight Board) was created.
So now, the internal controls are stronger with SOx, prohibiting the opportunity of major fraud, but also the external auditors are examined by the PCAOB, in response to Arthur Anderson being so bad at their jobs.
Someone mentioned, but SOx 404 also required the CEO and CFO to certify the financials, so if material fraud is occurring, they can be held personally and criminally liable.
So now, the internal controls are stronger with SOx, prohibiting the opportunity of major fraud, but also the external auditors are examined by the PCAOB, in response to Arthur Anderson being so bad at their jobs.
Someone mentioned, but SOx 404 also required the CEO and CFO to certify the financials, so if material fraud is occurring, they can be held personally and criminally liable.
Posted on 7/19/26 at 12:23 pm to CalcuttaTigah
Fraud in companies get solved by them going out of business.
Fraud in government gets "solved" by ever increasing taxes or money printing to pay for the fraud.
Just like the republicans trying to solve the fraud now, they get slandered like they are trying to starve children or make people suffer.
Fraud in government gets "solved" by ever increasing taxes or money printing to pay for the fraud.
Just like the republicans trying to solve the fraud now, they get slandered like they are trying to starve children or make people suffer.
Posted on 7/19/26 at 1:49 pm to CalcuttaTigah
Elizabeth Holmes & Theranos was the last big fraud I remember. Blood testing company that told investors it could do hundreds of tests with a few drops of blood. Story was completely fabricated.
Recently the cofounder and CFO of Supermicro SMCI using the company as a way to smuggle NVDA chips into China hasn’t been given enough press
Recently the cofounder and CFO of Supermicro SMCI using the company as a way to smuggle NVDA chips into China hasn’t been given enough press
Posted on 7/19/26 at 2:45 pm to Upperdecker
Ah, that is a good one from recent past. That chick tricked a lot of dudes on the board for sure, including a general I believe.
This post was edited on 7/19/26 at 2:47 pm
Posted on 7/19/26 at 3:23 pm to Tifway419
Theranos at least produced prison time.
I didn't get into Big 4 until after Anderson imploded, but it's still mostly accounting majors that got a week of "how to audit RHEL" in Orlando. I've watched auditors take on prem mainframes out of scope for audits, and all kinds of other stupid shite. And partners with CPAs signed off on these audits.
The fraud just moves around like jelly being squeezed, but I think there is too much trust in what auditors under PCAOB oversight can actually catch. If a client is hiding or obfuscating something, an outsider doesn't have a great chance of catching it unless the right spidey sense gets hit.
You want to find fraud and incompetence? Look at anything with the word "transformation" in the title.
I didn't get into Big 4 until after Anderson imploded, but it's still mostly accounting majors that got a week of "how to audit RHEL" in Orlando. I've watched auditors take on prem mainframes out of scope for audits, and all kinds of other stupid shite. And partners with CPAs signed off on these audits.
The fraud just moves around like jelly being squeezed, but I think there is too much trust in what auditors under PCAOB oversight can actually catch. If a client is hiding or obfuscating something, an outsider doesn't have a great chance of catching it unless the right spidey sense gets hit.
You want to find fraud and incompetence? Look at anything with the word "transformation" in the title.
Posted on 7/19/26 at 9:02 pm to LemmyLives
I worked for Anderson during Enron. Was unreal.
Posted on 7/20/26 at 6:10 am to CalcuttaTigah
Sarbanes–Oxley Act of 2002 is a United States federal law that mandates certain practices in financial record keeping and reporting for corporations.
Posted on 7/20/26 at 6:35 am to CalcuttaTigah
My aunt Toni (RIP) sounded the alarm on Enron 8 years before all the shite went down. And Ken Lay publicly castigated her for it.
Forbes: Hidden Risks by Toni Mack
Forbes: Hidden Risks by Toni Mack
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