A once famous actor said that there were only two people he had on instant dial: his lawyer and his accountant. Now that story may ring false, but it is true that in the world, our lives and fiances depend a lot on these professionals.
And when one of them fails to follow the Code of Conduct and Ethics that is part of their profession, it’s not just the client that suffers. Basically, everyone involved is affected when there are ethics and conduct violations in accounting and finance.
It’s no surprise that this makes Ethics CPE for accountants a valuable and required component of their professional careers. Continuing professional education credits are part of a CPA’s ongoing continuing education requirement, with Ethics as a state requirement they cannot skip.
When accountants violate their Code of Conduct, the ramifications affect the finances of companies and private individuals. Moreover, it erodes the public trust in professionals and the institutions they work for.
Here are some of the biggest cases of fraud in accountancy that shook the economies of the world.
The Lehman Brothers
The repurchase agreement that almost destroyed the country, the global financial services firm hid $50 billion loans as sales for the firm. The frim used a loophole in the system, allowing the sale of toxic assets to offshore banks in the Cayman Islands.
These unethical practices were revealed in 2008, when Lehman Brothers filed for bankruptcy. Their clients were soon transferred to other broker-dealers, while thousands of people lost their jobs, further putting the economy in a dangerous tailspin.
The Madoff Ponzi Scheme
The Bernie Madoff Investment Securities tricked investors of more than $64.8 billion in a Ponzi scheme that used investors’ money to pay returns to themselves or other investors. Madoff was sentenced to 160 years, while many of his investors were left penniless and robbed of their life savings.
Enron
In 2001 Enron was an energy and utility company that soon joined in energy trading, which allowed them to bet on the future prices of energy sources. However, it was soon revealed by a whistleblower that the company hid huge debts in their books, and that it had been losing money to almost $74 billion.
This resulted in the closure of the energy giant, and thousands of investors and employees lost retirement accounts and employment. Many of their overseas partners also closed too, resulting in many more workers losing jobs.
WorldCom
This was an accounting scandal that began when the company fraudulently inflated their assets to billions of dollars. The CEO committed a failure in accurate financial reporting, resulting in using costs as capital and adding fraudulent entries that inflated their revenues.
The company’s internal auditing discovered the fraud, with accounts that reached $3.8 billion in value. This resulted in a WorldCom filing for bankruptcy, with more than 30,000 people losing their jobs and investors losing more than $180 billion.
Ethics in Accounting Matters
Continuous learning is imperative for finance professionals, especially when it comes to Ethics. These cases are often studied and assessed to complete CPA Ethics and CPE credits requirements, but also give accountants and professionals a deeper understanding why following a strict Code of Conduct matters. For financial professionals interested in taking online CPE courses for ethics, CPE Inc. is the best place to go. They offer a wide range of Ethics course options, so visit cpeonline.com to earn your CPE credits with ethics as a focus.
