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Essay by   •  January 23, 2011  •  582 Words (3 Pages)  •  962 Views

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In 2002 one of the largest cable corporations Adelphia Communications Corporations filed for bankruptcy protection, in April of that same year the Security Exchange Commission announced it plans to investigate some of the actions of senior management personnel. The article I chose to analysis was found in the Washington Post dated April 26, 2005 after the Attorney Generals Office had reached an agreement with the Rigas family. It would appear that John Rigas and one of his son’s Timothy Rigas participated in rampant earnings manipulation and self-dealing (Johnson 2005). The SEC had said members of Rigas family used corporate funds for their own personal use and also failed to pay Adelphia for securities they owned (Johnson 2005). Basically the John Rigas and certain family members excluded billions of dollars from its consolidated financial statements, inflated earnings to meet Wall Street’s expectations and used corporate funds to purchase company stocks for personal gain.

How does this article relate to this week learning objectives? In chapter 2 of “Accounting: Concepts and Applications”, we learned about the balancing sheet, statement of cash flows and how financial statement tie together. We also learned the importance of the audit report. If I understood the chapter correctly it is critically important to have these numbers right and not to mislead people. It is very important to clearly and accurately put forth financial information or you could end up much like John Rigas and his three sons.

The concepts relate to my organizations, because the main corporate company that owns the facility I work at is a publicly traded company. The same accounting firm that much of Enron accounting handled the accounting for my organization, once everything came about they were sued by our parent organization and won a settlement. They were taken financial information given to them by the corporate group and sort of spinning in an all positive matter, due to the de-regulation of the energy groups during that time.

I am not sure what recommendations I could possibly make, because I have never been involved in the financial side



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