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Tyco International Accounting Issues - Research Paper Example
Finance & Accounting
Pages 6 (1506 words)
Tyco International Accounting Issues There is compelling evidence that past performance records at Tyco did not reflect the actual picture of the company’s status. Multiple reports have given strong indications of irregular accounting practices…
One of the most notable accounting malpractice employed by the company involved the low attrition rate, which were written off at a remarkably slow pace. The consequence of this accounting misnomer was a significant inflation of the profits as reported in the company’s financial records. A consistent pattern of this accounting practice had the effect of giving the shareholders the wrong kind of impression regarding the performance records of this company (Maremont, M and, Laurie Cohen 12 a). The markets were also deluded into believing in the falsified accounting records of the company. According to financial analysts, the amount of money involved in the slow attrition accounting practice was the major driving factor. For instance, it was reported that the company spent large sums of money in purchasing accounts from dealers. An estimate of 1.3 billion dollars has been given as the amount of money used by the company to purchase the accounts in 2001. Major discrepancies have also been seen in the mismatch between the posting of assets acquired and the selling prices that were attached to the same. This aspect has often been cited as a case of deliberate falsification of information intended to paint an artificially positive picture about the performance of the company (Bragg 23). ...
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