The Lucent Accounting Scandal
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(Case Code: FINC039) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Case Details: |
Price: |
| Case Code |
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FINC039 |
For delivery in electronic format: Rs. 400;
For delivery through courier (within India): Rs. 400 + Shipping & Handling Charges extra
ThemesAccounting Scam |
| Case Length |
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14 Pages |
| Period |
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1999 - 2004 |
| Pub. Date |
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2005 |
| Teaching Note |
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Not Available |
| Organization |
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Lucent |
| Industry |
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Telecom |
| Countries |
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USA |
Abstract:
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The case discusses the accounting frauds committed at the US-based telecommunications giant, Lucent Technologies Inc. (Lucent) during early 2000. It provides an insight into the ways by which the financial statements were manipulated at Lucent.
It examines the loopholes in the financial management of the company and the price it had to pay for circumventing the provisions of law. The case examines the allegations against Lucent and its officers with reference to the Securities Exchange Act, 1934. Finally, the case throws light on the damage control measures taken up by the new CEO to improve the company's performance and restore investor confidence.
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Issues:
» The need for sufficient internal control measures and transparency in the financial statements of a company
» The provisions of the laws with regard to finance-related scandals and the rigorous consequences for misleading the investors
» The importance of maintaining corporate integrity without succumbing to the temptation of short term benefits
» Analyse the issue of corrupt/unethical business practices and lack of good corporate governance, and the effect of the above on a company's financial status and image
» Discuss the role and responsibility of the senior executives, the board of directors and the external auditors and the nature and extent of the failure to avert the situation
» Identify the loopholes in accounting systems and understand the methods employed by companies to manipulate their financial statements to their advantage
» Differentiate between revenue and capital expenditure and the impact of misclassification on the financial position of a company
Contents:
Keywords:
Case, Lucent Technologies, Accounting Scandal, Class Action Suit, Window Dressing, Financial Mismanagement, Accounting Fraud, Securities Exchange Act, Internal Control, US GAAP and Unethical Practices
The Lucent Accounting Scandal
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