Peregine Systems was in the article for 10 major accounting scandals. Peregrine Systems, Inc. (PSI), an enterprise solutions software developer, which found success from the brginning of operations in 1981. The software company was able to present financial reports that showed profitable results of business operations for 17 consecutive quarters, through Andersen Accounting's consultancy and external audit services.As part of the accounting manipulations, PSI's resellers were convinced to receive the software goods delivered to them as consignment deals.
Although this meant no actual money received, the objective was to move the company's software stock inventory out of its offices and off its books.That way, the consignment deals were recognized in PSI's books as actual sales in the form of accounts receivables, albeit uncollected.PSI's books also recognized the famous "cookie-jar reserve account" as an additional buffer for the unreal sales. The software company's revenues were overstated by $100 million dollars from 1999 to May 2002.The substantial amounts of uncollected receivables and unjustified reserve account caught the attention of the SEC, and restatements of its financial reports were ordered.As a result of the restatements, Peregrine Systems, Inc., was forced to declare bankruptcy in 2002 and blamed Andersen Accounting. Accordingly, the latter allegedly failed to advise PSI management that the company was using the wrong accounting practices in recognizing revenues, nor did it advise about proper treatment of uncollected bad debts. Investigators saw through PSI's fraudulent schemes because the company benefited from the accounting manipulations, as the prices of its shares of stock rose from $2.25 to $79.50 in 2002.
The company's shareholders lost $4 billion in the software company, and in 2004 eight executive officers of PSI, including Gardner and Powanda, were indicted for grand larceny.
After reading this its crazy to think what companies actually do behind the scenes and how many actually do fraud and don't get caught.