Here we go again. It wasn’t that long ago that the Securities and Exchange Commission recently uncovered an incredible scheme perpetrated by high-level Cendant Corp. executives. CUC International merged with HGFC Inc. in 1997 to form Cendant. For 13 straight years, senior CUC executives systematically schemed to inflate earnings through fictional accounting. According to the SEC, these executives used an opportunities “cheat sheet” to “create” revenues out of thin air.
Sound familiar? Enron recently made just such headlines. This harrowing tale about a publicly traded company should serve as a warning for working with clients on the merger or acquisition trail. Be aware that schemes abound for “cooking” the books to serve up something more appetizing — and thus more valuable — than may really exist. The SEC is now demanding a “system of sup ervision for accountants who audit corporate America’s books.”
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