After Healthsouth Essay

After HealthSouth publicly became a traded company, their earnings were being escalated falsely. Management was under a huge amount of stress because they did not meet the standards of their business financially. When the company reported their earnings, they overstated them purposely. It fell under, “Income Before Income Taxes.” (Zmuda). Falling under the motivation of the fraud triangle, their sole motive was to meet their financial needs. Since they did not, between the years of 1999 and 2002 they were under investigation for the overstatement of their earnings by about $1.4 billion.
Scrushy was not willing to speak to anyone regarding this because he felt that his most important duty as the CEO was to make sure that the company’s requirements were being financially met. He still had another motive. As the CEO, Scrushy was willing to fake the earnings that were being met for his personal benefit. Since it is much harder to lower your class than to raise it, he didn’t want to give up living his extravagant life. That is why Scrushy remained escalating HealthSouth’s’ earnings falsely. From …show more content…
The company’s management wasn’t being monitored correctly which led to the lack of fraud detection. The earnings of HealthSouth were being compared to those of Wall Street and if they did not meet the expectations, Scrushy would order the company’s management to adjust the earnings in order to meet them. This was done quarterly by the senior officers. Because of the poor management, the accounting department were given the entries without knowledge and then fixed. If the CEO was allowing the management to do this, the employees should have gone to another manager or CEO to speak to them about the issue that is going on. It is very hard to go against what your CEO tells you to do, however, ethics is ethics. The same ethical standards applies to an employee at the bottom or the CEO at the