Waste Management Fraud by Jennie Yu on emaze

Waste Management Accounting Scandal

By: Casee Lan & Jennie Yu

Different operations include:

- 269 Active landfills

- 297 Transfer stations

- 390 Collection operations

- 36 Organic processing facilities

- 17 waste to energy plants

- 32 000 collection vehicles

and more...

- founded by Wayne Huizenga & Dean Buntrock in 1971.

- provides waste and environmental services for all over North America,

- intends to reduce adverse effects of waste on health, environment, or aesthetics.

Background Information

Waste Management Inc. Is recognized as the leading environmental solutions provider in North America. Who serves more than 20 million municipal, commercial and industrial customers in U.S. And Canada.

Wayne Huizenga

Dean Buntrock

Fraud

- 1992-1997

- revenues were not growing fast enough

- manipulated financial results

Accounting Scandal

- improperly eliminating and deferring current period assets

- established insufficient reserves to pay for income taxes and expenses

- avoided depreciation expenses

- assigned inflated salvage values and extended use lives

- assigned value to assets that had zero salvage value

- failed to report expense for decrease of their landfill

- did not write off the cost of unsuccessful development projects

IMPORTANT STAKEHOLDERS

Dean L. Buntrock : Waste Management's founder, chairman of the board of directors, and chief executive officer during most of the relevant period

Phillip B. Rooney : President and chief operating officer, director, and CEO for a portion of the relevant period

James E. Koenig : Executive vice president and chief financial officer

Thomas C. Hau : Vice president, corporate controller, and chief accounting officer

Herbert Getz : Senior vice president, general counsel, and secretary

Bruce D. Tobecksen : Vice president of finance

Arthur Anderson : LLP (Limited Liability Partnership) in connection with audits of Waste Management

Aftermath

Defendants' scheme eventually unraveled. In mid-July 1997, a new CEO ordered a review of the company's accounting practices. That review ultimately led to the restatement of the company's financial statements for 1992 through the third quarter of 1997. When the company filed its restated financial statements in February 1998, the company acknowledged that it had misstated its pre-tax earnings by approximately $1.7 billion. At the time, the restatement was the largest in corporate history.

Defendants' improper accounting practices were centralized at corporate headquarters, according to the complaint.

They are charged with making false and misleading statements about the company's accounting practices, financial condition, and future prospects in filings with the Commission, reports to shareholders, and press releases. They also are charged with using accounting manipulations known as "netting" and "geography" to make reported results appear better than they actually were and avoid public scrutiny.

Fun Fact

After the scandal, the new CEO set up an anonymous company hotline where employees could report the dishonest or improper behavior.

Questions?

Thank you!