As the internal accounting probe of the sales numbers of Alexion Pharmaceuticals, Inc. nears completion, its CEO David Hallal and CFO Vikas Sinha have unexpectedly resigned. Mr. Hallal for personal reasons and Mr. Sinha to pursue other opportunities. Wonder what the personal reason and other opportunities are!
What perfect timing! I am most intrigued now what the results of the accounting probe will be.
For three years in a row the Department of Housing and Urban Development has received the same accounting and internal controls conclusion from the audit of its financials. What is the conclusion: the audit found 11 material weaknesses, seven significant deficiencies in internal controls, and five instances of noncompliance with applicable laws and regulations. To add to that one of its subsidiary Ginnie Mae could not even present its material asset balances related to some loan assets in an audit ready state.
One may ask, so what is the company doing about it. Well looks like nothing, the officials refuse to explain why they haven’t fixed the poor accounting practices and fixed the financials. If they cant maintain their financials properly, how can they be trusted to safeguard the taxpayer money!
Diane Backis, an accounting manager at Cargill caused the company a loss of at least $25 million and stole more than $3.1 million from the company over a period of 10 years. She pleaded guilty to charges of mail fraud and false tax filings. She has agreed to pay Cargill $3.5 million, forfeit her home, give up her investment brokerage account and her Cargill pension. For the guilty charges she could also be imprisoned for up to 11 years.
What did she do? Well, Backis did quite a few accounting fraud tactics to enrich herself. Her job was to create customer contracts, generate and mail invoices, receive and process payments from customers. She would create and send fraudulent invoices with significantly discounted prices (reducing the company’s revenue), then ask the customers to send money to her office location instead of directly to the company’s financial institution, which was the required process, she would then deposit these checks in her personal account. To cover it all, she would book incorrect entries in the books and reverse those in a later month. Similarly, she would misapply the payments in wrong customer accounts, which made it look like various customers owed Cargill money, but then later she would go and reverse those entries. Her accounting scheme was so detailed that she was able to go unnoticed for over a decade.