Waste Management Audit Failure Essay
Waste Management, Inc., founded in 1894, offers environmental services to nearly 20 million residential, industrial, commercial, and municipal customers in the US, Canada, and Puerto Rico. With a large customer base, it is difficult to picture such a large company committing fraud. However, between the years of 1992 and 1997, several chief officers in the company engaged in a systematic scheme to falsify and misrepresent Waste Management’s financial results.
Heading the Company was Dean L. Buntrock, Waste Management’s founder, Chairman of the Board of Directors, and Chief Executive Officer for most of the relevant period. He set earnings targets and cultivated an atmosphere of fraudulent accounting to make …show more content…
*If internal controls failed high CR, then should have conducted more substantive testing of transactions and balances.
Suggestions for the Audit Profession
Before the Waste Management scandal erupted in 1998, there were many accounting policies and boards already in place due to the stock market crash of 1929. These included the Securities and Exchange Commission (SEC), American Institute of Certified Public Accountants (AICPA) and the Financial Accounting Standards Board (FASB). Before Sarbanes Oxley Act, there was the 1934 Securities Exchange Act, which was designed to restore investor confidence in terms of disclosures for initial offering of securities and applied mandatory reporting requirements for publicly traded companies. In 1934, Congress gave the SEC the responsibility and authority to set accounting standards, specifically for companies whose securities are publicly traded. The SEC has delegated the task to various private sector bodies (currently the FASB) while retaining its legislated authority. (Appendix 1)
However, Congress did very little during