This paper explains the white-collar financial scandal that was held at the Sunbeam Corporation and many of the key players who were tangled in this unsavory investigation. There were many laws that were disobeyed due to the manipulation and misrepresentation of the Sunbeam Corporation’s operating financial statements. The Board of Directors at the Sunbeam Corporation observed that they were not having rapid sales in their stock and wanted to hire someone who could turn the Corporation around.
They hired CEO, Albert Dunlap who was known for rescuing companies, and External Auditor, Arthur Andersen to restructure and turnaround the financial performance of the company, but, instead they had mislead them. When the Board of Directors had begun to take notice of the many different unnecessary changes in the Sunbeam Corporation, they took a hard look at the sales of the financial statements. During their investigation, it was found that Dunlap and Anderson together implemented improper transactions through their unlawful accounting practices. They both along with other top executives in the company were able to maneuver and shift the inventory of the financial statements of the Sunbeam Corporation because Dunlap had fired anyone that he believed would be a “whistleblower.”By having this advantage, they were able to greatly emphasize on the Sunbeam Corporation’s assets by boosting the number of sales in the financial statements. Through this method they had an extensive amount of inventory by using a “bill and hold” sales scheme in the account receivables.
The mismanagement of inventory and financial statements at the Sunbeam Corporation had forced the shares to tremendously decline.As a result of the fraudulent practice method that these participants cohorted in, it had accelerated the actual number of sales in this accounting fraud scheme which pushed the Sunbeam Corporation Board of Directors to question Albert Dunlap’s management decisions. The successful illusion the Dunlap created had lead to his firing . The main issues were that the pressures that they had received from Wall Street had contributed to the company culture that Dunlap had invented at the Sunbeam Corporation . The problems at hand were highly manipulated in order for them to be able to influence the investors on how the sales of the company were doing. Dunlap’s contributions to the financial and public relations led to the embarrassment at the Sunbeam Corporation due to the recognition of improper revenue, understatements and bad debts, and the abuse of consignment sale rules. This type of publicity had caused investors and the public alike to question the Sunbeam Corporation’s integrity because of the unsuccessful and inaccurate picture of a turnaround that was painted. Albert Dunlap’s management team may have created the ethical issues of business finance of integrity, justice, and fairness.
Arthur Andersen who was the external auditor, went along with the short-run focus on the financial performance of the Sunbeam Corporation which had put them in a illuminating position such as ultimately being viewed as having an audit failure. He knowingly violated the auditing rules by adhering to deceiving the Sunbeam Corporation with a clean audit. The lessons that could be learned from this outcome are to be honest, trustworthy, and forthcoming with any and all information so that in the future you will not be seen as submitting fraudulent work. DiscussionDue to this discussion, the assessments and measures were taken because of Dunlap’s ego and the abuse of his financial authority which had greatly impacted the value as well as the behavior of the employees negatively.
This analysis was made due to Albert Dunlap monopolizing the operations and future sales of the Sunbeam Corporation. The evaluation was analyzed from the changes that were taken place in the short time that he was CEO.ConclusionIn conclusion, the sham that was exposed at the Sunbeam Corporation what caused the investors to lose billions of their dollars. Effective solutions that can be done are to have strong internal controls, Board of Directors, and an audit committee who will oversee all sales and financial statements. The strategies that can be taken are to not allow for there to be an opportunity for any one person who is in a key position to have sole control over the operations and finances of a company.