ADMS 2400 Chapter Notes - Chapter 6: Berkshire Hathaway, Chief Financial Officer, False Accounting

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ADMS 2400 Chapter 6 Notes Summary
Introduction
Just Following Orders
The opa’s pofits hae ieased faste tha sales, i pat due to Cote’s isistee
on freezing raises and hiring only two to three employees for every four to five who exit.
The examples of Berkshire Hathaway and Honeywell illustrate the strong need for
management structure in an ever-changing, diverse, worldwide marketplace.
Betty Vinson took a job as a mid-level accountant for $50 000 a year with a small long-
distance company that grew up to become a giant telecom five years later.
Hard-working and diligent, within two years Ms Vinson was promoted to a senior
manager in the corporate accounting division.
In her new job, she helped compile quarterly results, along with 10 employees who
reported to her.
Soon after taking the new position, her bosses asked her to make false accounting
entries.
At fist, she said o.
But continued pressure led her to finally cave in. Her decision to make the false entries
came after the copa’s hief fiaial offie assued he that he ould assue all
responsibility.
Oe the ouse of si uates, Ms Viso ade illegal eties to olste the opa’s
profits at the request of her superiors.
At the end of 18 months, she had helped falsify at least $3.7 billion in profits.
Of course, the whole scheme unravelled, in what became the largest fraud case in
corporate history.
Ms Vinson pleaded guilty to two criminal counts of conspiracy and securities fraud,
charges that carry a maximum sentence of 15 years in prison.
She was sentenced to five months in prison and five months of house arrest.
What ould ou hae doe had ou ee i Ms Viso’s jo?
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