This website uses cookies to ensure you have the best experience. Learn more

Aig Scandal Essay

2549 words - 11 pages

AIG Accounting Scandal


1.0 Introduction ………………………………………………. 2
1.1 Overview of AIG …………………………………….. 2
2.0 Scandal Methodology Used by the Company………… 3
2.1 Accounting Practices Errors ……………………….. 3
3.1 Ways to Hide Accounting Improprieties ………………. 4
4.1 Who the scandal effected ………………………………. 7
5.1 Recommendations ………………………………………. 8
6.1 Conclusions ………………………………………………. 9
7.1 References ...view middle of the document...

(Cunningham.L, 2013)

In 1984, AIG listed its shares on the New York Stock Exchange (NYSE). Throughout the 1990s, AIG created new source of income through various ventures, including the obtaining of International Lease Finance Corporation (ILFC), a supplier of rented air ship to the aerial shuttle industry. The early 2000s saw a time of development as AIG gained American General Corporation, a main household life insurance and annuities provider, and AIG entered new markets incorporating India.

AIG are a system of in excess of 64,000 individuals in more than 90 nations who meet up consistently to tackle the world's new difficulties. AIG are individuals who accept that with the right values and diligent work, anything is conceivable. AIG realize that by being the best in the business, it permits every single one of their clients to be the best, and to fulfill their objectives and discover achievement consistently.
2.0 Scandal Methodology used by the Company

2.1 Accounting Practices Errors
The occurrence that led most specifically to the accounting scandal involved a transaction in the fall of 2000 between AIG and General Re, a unit of Berkshire Hathaway, run by billionaire investor Warren Buffett. (Ian.M, 2005)
The particular accounting improprieties that have been used by AIG are mainly in term of recording the loan as income in the books of records. The company has lower reserves in sufficiently paying up the insurance claims, and this has come about into sourcing an advance of $500 million, which has been recorded as income in the books of accounts. This has been the serious accounting impropriety that has been emulated at AIG and it reinforced up its financial statement.

The case analysis of AIG Group indicates that the company has adapted a methodology of accounting practices errors in accounting for transactions in its books of accounts. There are different such improper accounting that have been done in the books of AIG which has resulted into the accounting embarrassment. The main purpose behind concealing important data in its financial statement is mainly to perform the manipulation of its true financial conditions. The analysis of the methodology as followed has indicated that the company has manipulated its accounting procedures and treatments for recording its financial performances in a manner that results into desired accounting effect to the company.

Hence, the strategy that has been considered at AIG is mostly the execution of accounting errors so a desired perspective with regards to the company 's performances can be attained. This has been an important methodology that is involved in greater part of the cases in the past whereby the administration from top levels rolls out improvements to the accounting procedure with a perspective to guarantee general additions.

The accounting methodologies are manipulated with a view to represent the positive overall performance conditions of the company, yet it leads...

Other Papers Like aig scandal

Business Ethics Essay

1621 words - 7 pages introduced (Joshi, 2004 ). The government also was involved in the company’s misconduct because they protected them since the chairman Mr. Greenberg was involved in international politics hence he could provide the government with information (Ferrell, Fraedric and Ferrell, 2011). 2.1 The major overriding issue The major overriding issue of this case is ownership problem. Mr. Greenberg, the former CEO of AIG expanded their business from initial

Rational Approaches to Ethics Essay

2024 words - 9 pages bailing out major financial corporations. However, when AIG received its bailout funds, a large portion went to paying the bonuses of top executives. The insurer justified its actions by saying it had to retain its top executives to turn the company around (Creamer, 2009). 2.5 Deontology Deontology implies that everyone has an obligation and moral duty to follow a set of universal standards. There are certain actions that are right and wrong

Review Of Accounting Ethics

1666 words - 7 pages scammers who hide in plain sight everywhere we go. Less than 15 years ago, there was a time where multiple financial scandals had been reported taking place in very successful companies, including Enron, WorldCom, AIG, and others (Weygandt, Kimmel, Kieso, 2012, p. 7). The number and magnitude of these scandals resulted in great suspicion of financial reporting, which proved to be detrimental to a company’s success. In my opinion, the most memorable

Ethics: Complexity and Transparency in the Business World

2029 words - 9 pages 2001. One of the primary reasons that led to this scandal was Enron’s usage of special purpose entities (SPEs) to cover up debt that the company was taking upon. By hiding additional debt, the company looked favourable as an investment because of low risk. Additionally, creditors were impressed with the low debt to equity ratio and were open to the idea of lending Enron money in case the need arose. SPEs were also used to cover up any losses that

Effective Ethics and Crisis Management

1962 words - 8 pages with poor ethics we discuss in class were AIG, Morgan Stanley, and 1000s of other banks deceiving the public with mortgages. There were also companies that got in trouble for bad accounting practices some of them includes the Enron Scandal, WorldCom, and Grant Thorton Accounting Firm in Chicago. (Previous discuss above with ethical issues accounting practices) If one is looking for a company that models an effective Crisis Management well

The Journey from Deregulation to Regulation

4031 words - 17 pages wrote insurance, which would typically set aside reserves for expected risk of loss and payout but had no such obligations when it came to CDS 16. The banks used CDS to set aside lower amounts in reserves for their loans 15 since credit-defaults swaps and other derivatives were exempted from regulation by any state insurance board or regulator 16 since swaps were not considered as insurance. The biggest underwriter of CDS was AIG, at the time the

Freedom And Responsibility

2141 words - 9 pages Built within the Constitution of the United States are specifically defined freedoms that are guaranteed to all citizens. Conversely, with every constitutional freedom there comes a corresponding responsibility. On September 25, 1789, the state legislature’s twelve proposed amendments were transmitted by congress, the first two dealing with congressional representation and congressional pay. The following numbers three through twelve were

Hate Crime Laws

2348 words - 10 pages On June 7, 1998, 49-year-old James Byrd Jr. of Texas accepted a ride from three white men, who then beat him severely, urinated on him, chained him by his ankles to the back of their pick-up truck, dragged him for three miles into the countryside, and dumped his corpse in front of an African-American cemetery (Graczyk). A little over a year later, a jury sentenced ring leader John King to death by lethal injection (“Man Executed for Dragging

Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages Rational Emotional Behavior Therapy Case Study of Sarah: A Conceptualization and Treatment Plan Rational emotive behavior therapy, REBT, was developed by Albert Ellis and holds the central belief that the events in our lives do not cause our disturbances but that they are instead caused by our view of the events (Murdock, 2009). Murdock (2009) states that “people are seen as responsible for their behavior” (p. 279) but, because they are

Holidays In Albania

1636 words - 7 pages Have you ever thought about having exciting and incredibly cheap vacations? Albania might be the right choice. According to My Travel Guide, Albania is ranked the fourth among ten places worth visiting in Eastern Europe (“Top 10 Eastern European Destinations”). One can encounter three kinds of vacations in this Mediterranean country: winter, summer, and cultural. The ideal places to spend your winter vacations are the Albanian Alps. They are

A Heart Of Darkness

1748 words - 7 pages In this short story, there are frequent significant subject and ideas that make the story, "A Heart of Darkness," by Joseph Conrad, and haunting novel. The main theme is absolute white power over the natives. The theme validates the corruption, and the dependence caused by the white people as they took over the Congo. White men were giving all the power; they had no self-control, and in the end they did not use wisely. The white men became

Related Essays

Introduction To The Sciences Essay

1140 words - 5 pages Tommy Nichols MGMT115-1302B-03 Phase3 DB Professor Berry June 9, 2013 The company that I chose was the insurance giant AIG because of the bailout scandal in which the government gave AIG $182 billion dollars which was the leading company bailout in history (Greider, 2010). AIG’s downfall and subsequent salvage complicated nearly all the serious components, including misconception and fraud. These pecuniary transactions were dreadfully

Aig Fair Or Foul? Essay

576 words - 3 pages began to grow and prosper. I wide range of premium services was being offered and the future looked bright. The company went public in 1969. Fast-forward thirty-five years, no one could have prepared for what was about to happen. In 2005 an accounting scandal rocked AIG to the tune of $1.6 billion. Criminal charges were filed against many of the company’s top executives. The summer of 2008 was a time that began to send shockwaves around all of the

American Insurance Group Essay

724 words - 3 pages AIG could not predict the direction of the mortgage market despite having financial experts using computer models to manage risks. The government believed it had to bailout AIG because letting AIG going into bankruptcy could have a negative impact on the global financial market due to the involvement of many other financial institutions or counterparties in this scandal. 2. SWOT ANALYSIS Strengths: 1. Strong brand name and good financial

Should The Top Executives Of The Major Banks That Received Bailout

886 words - 4 pages . (2009). Report: Merrill Lynch CEO Spent Over $1M to Redecorate Office. Retrieved on June 20, 2010,retrieved from http// Sullivan, M. (2008). After Bailout, AIG Execs Head to California Resort. Retrieved on June 20, 2010, from Spitzer, E. (2009). The Real AIG Scandal. Retrieved on June 20, 2010, from, K. & Trevino, L. (2004). Managing Business Ethics: Straight Talk About How To Do It Right (3rd Ed.). New York: Wiley