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Based on the video, HealthSouth conducted a series of actions that unfortunately altered the book’s integrity. Firstly, HealthSouth intentionally falsified revenues and assets. As shown in the video, it was clear that fraud was manifested in the representation of the assets (Stanford Graduate School of Business, 2011). For instance, the renowned personnel named Scrushy performed the fraudulent act to enrich himself. As a conspiracy, the HealthSouth fed in inflated figures into two programs to create consolidated corporate reports despite legitimate reports that HealthSouth owned facilities submitted.
Secondly, HealthSouth intentionally misreported by failing to properly cite technology sales to the related company by Source Medical. Such an erroneous account resulted in $29 million overstatement in late 2001 (Maguire, 2021). In supporting the same, the video indicated such numbers as false income, which was an intentional accord of HealthSouth. Actions behind these false recordings were found to be a result of the workers’ actions to use three-letter codes during the process of indication, which resulted in bogus numbers.
Finally, HealthSouth carried out the omission as indicated in the video, and some information was missing from the financial statements. Missing information unmasked assets which added up to $ 2 billion (Maguire, 2021). The omission was evident as the information failed to provide little metal tags often used as tracking devices for the inventory. Based on the three tools used to doctor the book, it is theoretical that all the tools had a devastating impact on the accuracy and reliability of the financial statements. All the tools altered the integrity that was required to attain reliable statements.
References:
Stanford Graduate School of Business (2011). Ethics and Fraud at HealthSouth: Lessons from Inside a Corporate Meltdown. [Video]. YouTube. Web.
Maguire, L. (2021). Triangular Francs: The Eisenhower administration’s complicated Franco-American-south Vietnamese system of foreign aid to Saigon. Journal of American-East Asian Relations, 28(4), 356-382.
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