A Filthy Introduction 🗑️
Have you ever taken out the trash only to find out you’ve accidentally thrown away something valuable? Now, imagine you’re an executive at Waste Management in the 90s, and that
### What accounting term lies at the heart of the Waste Management scandal?
- [x] Depreciation
- [ ] Appreciation
- [ ] Amortization
- [ ] Inflation
> **Explanation:** The executive team manipulated depreciation to show fraudulent profits.
### How much money did the restatement cost Waste Management?
- [ ] $1.7 million
- [ ] $17 million
- [x] $1.7 billion
- [ ] $17 billion
> **Explanation:** The restatement exposed the real financial situation, costing them $1.7 billion.
### Over which years did Waste Management executives manipulate earnings figures?
- [x] 1992-1997
- [ ] 2000-2005
- [ ] 1995-2000
- [ ] 1988-1993
> **Explanation:** The irregularities occurred during these crucial years.
### Which firm served as Waste Management's auditors during the scandal?
- [ ] Deloitte
- [ ] Ernst & Young
- [x] Arthur Andersen
- [ ] KPMG
> **Explanation:** Arthur Andersen continued to issue audit opinions despite knowing the fraud.
### What improper means did Waste Management executives use to hide expenses?
- [ ] Hiding Receivables
- [x] Manipulating Residual Value
- [ ] Payroll Adjustments
- [ ] Investment Diversion
> **Explanation:** They manipulated residual value and useful economic life calculations to hide expenses.
### What did the new CEO do to uncover the scandal?
- [ ] Implemented a new policy
- [x] Initiated a review
- [ ] Hired new staff
- [ ] Acquired another company
> **Explanation:** The new CEO initiated a comprehensive review of the company's accounting practices, uncovering the fraud.
### What's the name of the concept where book values are periodically reduced over time?
- [x] Depreciation
- [ ] Liquidity
- [ ] Equity
- [ ] Apportionment
> **Explanation:** Depreciation involves reducing asset values over their useful life, which was manipulated here.
### How much was Arthur Andersen fined for their involvement in the Waste Management scandal?
- [ ] $1 million
- [x] $7 million
- [ ] $10 million
- [ ] $15 million
> **Explanation:** Arthur Andersen was fined $7 million for continuing to issue clean audit reports.
