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The Tyco Scandal

CPA forensic accounting is used in many famous cases to uncover financial wrongdoing.
This was the case in the Tyco Scandal that took place in 2002. CPA forensic accounting was used
to unveil many discrepancies within the company’s records that showed significant fraud had
occurred over a period of time. In the case of Tyco, the scandal really involved the unethical
practices of the main ranking officers, primarily the CEO Dennis Kozlowski.
Kozlowski was found to have made a significant number of questionable financial
transactions that were not included in the company’s financial records. In fact, it was
determined that Kozlowski even enlisted the help of lower-level employees to help him cover
up these transactions. During some of these transactions it was determined that Kozlowski had
directly forwarded Tyco money to his wife. In the end it was found that Kozlowski stole millions
of dollars of Tyco money. In 2005 Kozlowski and his former CFO Mark Swartz were convicted
and forced to serve time in jail.
Auditing had been performed by an outside company named PricewaterhouseCoopers.
They had been previously responsible for checking financial reports. It became clear that they
failed to properly do their due diligence as significant mistakes were missed. One of Kozlowski’s
greatest scandals was his ability to evade taxes. PricewaterhouseCoopers failed to recognize
this. Kozlowski had evaded taxes through his purchase of “artwork” in various states. In fact, he
had multiple counts of mixing his personal money with his business money known as
Commingling of Assets. It took outside CPA forensic accountants to be able to realize that all of
this was taking place and to provide enough evidence for a conviction. Kozlowski’s shareholders
had all simply trusted him to do right by the company, meanwhile he was stealing millions of
dollars.

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