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