Tyco International Accounting Issues Research Paper

Tyco International Accounting Issues - Research Paper Example one(a) of the near notable history malpractice employed by the compevery involved the low attrition rate, which were written arrive at at a remarkably slow pace. The consequence of this explanation misnomer was a significant inflation of the internet as reported in the companys financial records. A consistent pattern of this accounting practice had the effect 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 also deluded into believing in the falsified accounting records of the company. According to financial analysts, the amount of money involved in the slow attrition accounting practice was the major driving itemor. For instance, it was reported that the company spent cock-a-hoop sums of money in purchasing accounts from dealers. An estimate of 1.3 billion dollars has been given as the amount of money em ploy by the company to purchase the accounts in 2001. Major discrepancies have also been seen in the mismatch amidst 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 untruth of information intended to paint an artificially positive picture about the performance of the company (Bragg 23). One such case involved the purchase and sale of Anglo Seal division. Anglo Seal was bought for about 20 meg dollars according to the information posted in the companys accounting records. In the space of metre of one year, the same asset was sold off at a price of 111 million dollars. whatever 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 some sensitive omissions and commissions due to weaknesses of read (Maremont and Laurie 10 b). According to ana lysts, it is not practically conceivable how an asset could appreciate to nearly eight clock its purchase price within the short time of a year. The obvious intention was to bring batch the value of expenses, while adjusting upwards the level of sales and revenues. As a result, the company presented itself as oddly robust in hurt 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 force of bringing down companies because all safeguard measures are rendered useless in the face of irregular and enhancive 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 state of accounts as reported by th e company (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