Ethics and HealthSouth Essay Example | Topics and Well Written Essays - 3750 words

Ethics and HealthSouth - Essay Example The case of HealthSouth Corporation is one of those cases where the owner along with others killed the image and essence of the business for earning extra wealth and recognition in the business and social environment. Richard Marin Scrushy is the founder of HealthSouth Corporation; a global health care organization located in Birmingham, Alabama (Bartlett, Donald, 2005). The organization is the largest owner and operator of inpatient rehabilitative hospitals in the nation with great reach in more than 26 states in the country. By the beginning of 2000s, the organization was performing well in the competitive business environment and even recorded $4.5 billion in the year 2003. This made HealthSouth Corporation as one of the most successful health care organizations in the United States. The dawn of 2002 marked the presence of slow down and many expected HealthSouth Corporation to move at a slow pace. However, the organization kept performing at a steady pace that amazed the industry analysts. An investigation by the Federal Bureau of Investigation revealed that Richard Marin Scrushy has been charged for the accounting scandal for falsely exaggerating the company’s earning along with playing with the emotions of shareholders by keeping them in dark. The Security and Exchange Commission of the US charged Scrushy with 36 of the original 85 counts and was acquitted of all charges in 2005. However, cases were filed against him that proved him guilty on charges of manipulation of earnings and accounting fraud affecting the decisions of shareholders. The discussion aims at highlighting the key issues associated with the accounting fraud along with analysing key ethical issues involved in an analytical manner. An Overview of the... From this research it is clear that the accounting fraud surfaced in the year 2002 when Scrushy was accused of selling $75 million of stocks before posting a huge loss that raised a number of questions on the accounting activities of the company. The Security and Exchange Commission of the United States later accused Scrushy for an accounting fraud pertaining to inflation of company’s earnings by $1.4 billion. This was considered as an attempted fraud for misleading the shareholders along with window dressing the financial statements for meeting shareholder’s expectations. The Security and Exchange Commission of the United States stated that Scrushy instructed his top officials and accountants to falsify financial statements in order to stand tall in front of the investor’s expectations. The prices of the share were controlled in an illegal and unethical manner that later proved fatal for the organization and other top officials along with the owner Scrushy. In t he early 2000s, the company’s earnings were inflated by more than 4000% that represented 10% of the total assets of the organization. The organization hired an outside law firm to analyze the stock sale tale of Scrushy but later found that it has nothing to do with the manipulation in the financial statements. In 2003, the Federal Bureau of Investigation executed search warrants and accused Scrushy for more than 80 charges and he was acquitted on 36 charges against him. The ethical and legal stances of the owner and the organization were questioned by the shareholders and stakeholders that went unanswered till 2009.