In the late 1990s, this was not a problem as the stock was continuing to climb to all-time highs. However, once the economy began to slow, is when this strategy backfired by forcing them to issues more stock to cover these losses. As shares were declining, many investors became weary of continuing to participate in these activities. (Healy, 2003)

In late 2001, these activities were brought to the attention of regulators and investors (which resulted in the eventual bankruptcy of the firm). This is illustrating how forensic accounts overlooked or ignored key areas that could have uncovered fraudulent activities. As a result, one could argue that the lack of ethics and the close relationship with company executives helped to perpetuate these abuses. (Healy, 2003)

Insider Trading

Another type of fraud that is most prevalent is insider trading. This is when executives will have specific knowledge of the financial situation surrounding...
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