The accounting hall of shame has a new entrant: HealthSouth, the largest chain of rehabilitation hospitals in the US. The US Securities and Exchange Commission has charged the company and its chief executive Richard M Scrushy with a massive accounting fraud, which went on for almost over a decade-and-a-half!.
"Oaths
are only a small step in the business of cleaning up
American companies," so wrote Economist,
the influential newspaper in its edition, dated August
15, 2002, a day after the deadline for filing
certified financial statements with the SEC expired.
About a year on, and it appears, perhaps, even
certifications too may not guarantee truthfulness. A
fact, even the regulatory authorities might have been
realizing now. The Sarbanes-Oxley Act, which came into
existence last year in response to a series of
accounting scandals, involving Enron and WorldCom
among others, that rocked Wall Street, made it
mandatory for all publicly listed companies to file
certified financial statements, duly signed by their
chief executives and chief financial officers. Among
some 900 odd companies, which filed such
certifications, was also HealthSouth ("HRC",
the stock symbol). However, as the SEC discovers now,
it could not stop the company from lying to it and to
thousands of its shareholders. The market regulator
has charged the company with a massive accounting
fraud involving its chairman and chief executive
Richard M Scrushy, the man who founded and nurtured
the company. |
