Tyco International Accounting Issues Research Paper

Tyco International Accounting Issues - Research Paper ExampleOne of the most notable score malpractice employed by the attach to involved the low attrition rate, which were written off at a remarkably slow pace. The consequence of this accounting misnomer was a significant inflation of the profits as reported in the companys financial records. A consistent pattern of this accounting practice had the install of giving the shareholders the wrong kind of impression regarding the performance records of this company (Maremont, M and, Laurie Cohen 12 a). The markets were withal deluded into believing in the falsified accounting records of the company. agree to financial analysts, the bill of money involved in the slow attrition accounting practice was the major driving factor. For instance, it was reported that the company spent large sums of money in purchasing accounts from dealers. An estimate of 1.3 billion dollars has been given as the amount of money used by the company to purc hase the accounts in 2001. Major discrepancies have also been seen in the mismatch between the posting of assets acquired and the selling prices that were attached to the same. This aspect has often been cited as a case of deliberate falsification of information mean to paint an artificially positive picture about the performance of the company (Bragg 23). One such case involved the purchase and sale of Anglo legal tender division. Anglo Seal was bought for about 20 million dollars according to the information posted in the companys accounting records. In the space of time of one year, the same asset was sold off at a price of 111 million dollars. Some analysts argue that the real losses incurred by Tyco could be even much higher given the fact the team of accountants and lawyers who worked through the companies records overlooked or could not access roughly sensitive omissions and commissions due to weaknesses of evidence (Maremont and Laurie 10 b). According to analysts, it i s not practically conceivable how an asset could appreciate to nearly eight times its purchase price within the short time of a year. The axiomatic intention was to bring down the value of expenses, while adjusting upwards the level of sales and revenues. As a result, the company presented itself as particularly robust in terms of growth. The danger of such accounting practices is that they are not sustainable in the long run. They tend to shield the companys failings from the shareholders and the markets. According to some analysts, such practices have the capacity of bringing down companies because all safeguard measures are rendered useless in the face of minute and cosmetic accounting practices. The irregular practices often shield the companies from the indicators of possible slump of a slackened performance. Defenders of Tycos book-keeping methods have argued that any alternative ways of accountancy could not significantly alter the maintain of accounts as reported by the c ompany (Maremont and, Laurie 12 c ) . They rely on the reports of internal auditors who argued that few things would change in terms of performance regarding the companys overall growth strategy. It would be appropriate to consider the weaknesses of the irregular accounting practices in comparison to similar practices that often ended up in total failure. The collapse of Meryl Lynch and other famous firms were attributed, in part, on the reliance on cosmetic