Healthsouth Scandal Essay

2186 Words 9 Pages
HealthSouth was what seemed to be an ordinary striving medical business. Some would even say it was the most successful in its field , but unlike other corporations, it had a foul secret. All the grand success that HealthSouth was known for was a lie, a mask to hide what was going on behind the scene, hidden from the public eye. A secret so well hidden, that it went unnoticed for years. A secret so large it broke not only the law but several accounting principles. It was the rise and fall of the largest and most victorious corporation in the Health Care Corporate Field; the HealthSouth scandal. During the years 1996 to 2003 it was proven that the American corporation HealthSouth led by its CEO, Richard Scrushy, inflated and created more than …show more content…
However, the corporation was caught by selling 75 million dollars in shares a day before the company experienced a huge loss, catching the attention of U.S. Securities and Exchange Commission (SEC) . A company which was known for its ambulatory surgery and rehabilitative health care services throughout the United States fabrics one of the most inconspicuous false impressions known to the corporate world. Carefully using deceptions of the Generally Accepted Accounting Principles (GAAP) such as materiality, conservatism, and reliability, verifiability, and objectivity as well as ethics, the company was able to improve their initial appearance. HealthSouth failing to meet the materiality, conservatism, and reliability, verifiability, and objectivity accounting principles as well as ethic standards meets its fall when the company is caught with conspiracy, security fraud, and money laundering carefully scattered along their financial statements and kept hidden by their dedicated employees. Corrupted management, originated financial statements, and falsified numbers all contributed to the history of HealthSouth’s …show more content…
CEO and co-founder of HealthSouth along with several close associates were at the heart of the crime . The accounting scandal was “overlooked” by Ernst and Young, the trusted auditors of the company, who were “unable” to catch the seven year fraud since 1984 . The currently public company was founded in 1984 and was established as a private company under the name “AmCare” . Within two years it changed its name to “HealthSouth” and became a public enterprise . Leading up to 1988 it quickly expanded throughout the United States and became the largest provider of rehabilitation services in 1993 . During the period of 1996 to 2003, HealthSouth used corrupted management, originated financial statements, and falsified numbers which managed to manipulated US $2.7 billion . In 2000, it continued to dominate the rehabilitation services market and continued to portray a profitable company . However, the corporation’s fortune took a down turn in March of 2003 when it was accused of inflating earnings by US 1.4 billion since 1999 . In 2004, the HealthSouth scandal was discovered along with US $2.7 billion in false entries which came in the form of exaggerated reported revenue and failure to properly record operating expenses . It was delisted from the New York Stock Exchange (NYSE) . As of 2007, there has been a massive reconstructing effort, of which

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