Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, sometimes with the cooperation of officials in other corporations or affiliates.

In public companies, this type of "creative accounting" can amount to fraud and investigations are typically launched by government oversight agencies, such as the Securities and Exchange Commission (SEC) in the United States.

Scandals are often only the 'tip of the iceberg'. They represent the visible catastrophic failures. Note that much abuse can be completely legal or quasi legal.

For example, in the domain of privatization and takeovers:

It is fairly easy for a top executive to reduce the price of his/her company's stock – due to information asymmetry. The executive can accelerate accounting of expected expenses, delay accounting of expected revenue, engage in off balance sheet transactions to make the company's profitability appear temporarily poorer, or simply promote and report severely conservative (e.g. pessimistic) estimates of future earnings. Such seemingly adverse earnings news will be likely to (at least temporarily) reduce share price. (This is again due to information asymmetries since it is more common for top executives to do everything they can to window dress their company's earnings forecasts). There are typically very few legal risks to being 'too conservative' in one's accounting and earnings estimates.

A reduced share price makes a company an easier takeover target. When the company gets bought out (or taken private) – at a dramatically lower price – the takeover artist gains a windfall from the former top executive's actions to surreptitiously reduce share price. This can represent tens of billions of dollars (questionably) transferred from previous shareholders to the takeover artist. The former top executive is then rewarded with a golden handshake for presiding over the firesale that can sometimes be in the hundreds of millions of dollars for one or two years of work. (This is nevertheless an excellent bargain for the takeover artist, who will tend to benefit from developing a reputation of being very generous to parting top executives).

Similar issues occur when a publicly held asset or non-profit organization undergoes privatization. Top executives often reap tremendous monetary benefits when a government owned or non-profit entity is sold to private hands. Just as in the example above, they can facilitate this process by making the entity appear to be in financial crisis – this reduces the sale price (to the profit of the purchaser), and makes non-profits and governments more likely to sell. It can also contribute to a public perception that private entities are more efficiently run reinforcing the political will to sell off public assets. Again, due to asymmetric information, policy makers and the general public see a government owned firm that was a financial 'disaster' – miraculously turned around by the private sector (and typically resold) within a few years.

All accounting scandals are not caused by top executives. Oftentimes managers and employees are pressured or willingly alter financial statements for the personal benefit of the individuals over the company. Managerial opportunism plays a large role in these scandals. For example managers who would be compensated more for short term results would report inaccurate information since short term benefits outweigh the long-term ones such as pension.^[1]

Notable accounting scandals[link]

Notable outcomes[link]

The Enron scandal turned in the indictment and criminal conviction of one of the Big Five auditor Arthur Andersen on June 15, 2002. Although the conviction was overturned on May 31, 2005 by the Supreme Court of the United States, the firm ceased performing audits and is currently unwinding its business operations. The Enron scandal was defined as being one of the biggest audit failures. The scandal included utilizing loopholes that were found within the GAAP (General Accepted Accounting Principles). For auditing a big sized company such as Enron, the auditors were criticized for having a brief meeting few times a year that covered lots of material. By January 17, 2002 Enron decided to discontinue its business with Arthur Andersen claiming they had failed in accounting advice and related documents. Arthur Andersen was judged guilty of obstruction of justice for getting rid of many emails and documents that were related to auditing Enron. From this incident little less than 100,000 employees lost their jobs. Although later the ruling was overturned by the U.S. Supreme Court, the image of the auditing firm have been damaged beyond repair, and was never able to come back to its full operation capacity.

On July 9, 2002 George W. Bush gave a speech about recent accounting scandals that had been uncovered. In spite of its stern tone, the speech did not focus on establishing new policy, but instead focused on actually enforcing current laws, which include holding CEOs and directors personally responsible for accountancy fraud.

In July, 2002, WorldCom filed for bankruptcy protection, in what was considered the largest corporate insolvency ever at the time.

These scandals reignited the debate over the relative merits of US GAAP, which takes a "rules-based" approach to accounting, versus International Accounting Standards and UK GAAP, which takes a "principles-based" approach. The Financial Accounting Standards Board announced that it intends to introduce more principles-based standards. More radical means of accounting reform have been proposed, but so far have very little support. The debate itself, however, overlooks the difficulties of classifying any system of knowledge, including accounting, as rules-based or principles-based.This also led to the establishment of Sarbanes-Oxley.

On a lighter note, the 2002 Ig Nobel Prize in Economics went to the CEOs of those companies involved in the corporate accounting scandals of that year for "adapting the mathematical concept of imaginary numbers for use in the business world".

In 2003, Nortel made a big contribution to this list of scandals by incorrectly reporting a one cent per share earnings directly after their massive layoff period. They used this money to pay the top 43 managers of the company. The SEC and the Ontario securities commission eventually settled civil action with Nortel. However, a separate civil action will be taken up against top Nortel executives including former CEO Frank A. Dunn, Douglas C. Beatty, Michael J. Gollogly and MaryAnne E. Pahapill and Hamilton. These proceedings have been postponed pending criminal proceedings in Canada, which opened in Toronto on January 12, 2012.^[46] Crown lawyers at this fraud trial of three former Nortel Networks executives say the men defrauded the shareholders of Nortel of more than $5 million. According to the prosecutor this was accomplished by engineering a financial loss in 2002, and a profit in 2003 thereby triggering Return to Profit bonuses of $70 million for top executives.^{[47][48][49][50][51]}

In 2005, after a scandal on insurance and mutual funds the year before, AIG was investigated for accounting fraud. The company already lost over 45 billion US dollars worth of market capitalisation because of the scandal. Investigations also discovered over a billion US dollars worth of errors in accounting transactions. The New York Attorney General's investigation led to a $1.6 billion fine for AIG and criminal charges for some of its executives.^[52] CEO Maurice R. "Hank" Greenberg was forced to step down and is still fighting civil charges being pursued by New York state.^[53][54]

See also[link]

• Accounting ethics
• Certified Forensic Accounting Professional
• Corporate abuse
• Corporate scandal
• Creative accounting
• Dotcom bubble
• Financial crisis of 2007-2010
• Philosophy of accounting
• Forensic accounting
• Sarbanes-Oxley Act
• Savings and loan crisis
• Tobashi scheme
• Securities fraud
• Vivien v. Worldcom
• White-collar crime

References[link]

Further reading[link]

• John R. Emshwiller and Rebecca Smith, 24 Days: How Two Wall Street Journal Reporters Uncovered the Lies that Destroyed Faith in Corporate America or Infectious Greed, HarperInformation, 2003, ISBN 0-06-052073-6
• Lawrence A. Cunningham, The Sarbanes-Oxley Yawn: Heavy Rhetoric, Light Reform (And It Might Just Work)
• Zabihollah Rezaee, Financial Statement Fraud: Prevention and Detection, Wiley 2002.

External links[link]

• U.S. Securities and Exchange Commission website
• U.S. President Bush's speech, 2002-07-09 NPR report (audio recording)
• "Why didn't our auditors find the fraud?", Wisconsin Law Journal, January 25, 2006

William Patton "Bill" Black, Jr. (September 17, 1926 – October 21, 1965) was an American musician who is noted as one of the pioneers of rockabilly music. Black was the bassist in Elvis Presley's early trio and the leader of Bill Black's Combo.

Early life[link]

Black was born in Memphis, Tennessee, to a motorman for the Memphis Street Railway. He was the oldest of nine children^[1] His father played popular songs on the banjo and fiddle to entertain the family. Black learned to play music at the age of 14 on an instrument made by his father—a cigar box with a board nailed to it and strings attached.^[2] At the age of sixteen, Black was performing "honky-tonk" music on acoustic guitar in local bars.^[2]

During World War II, Black was stationed with the U.S. Army at Fort Lee in Virginia. While in the Army, he met Evelyn, who played guitar as the member of a musical family. They married in 1946 and returned to Memphis. Black worked at the Firestone plant.^[2]

Career[link]

Black began playing the upright bass fiddle. He modeled his "slap bass" technique after one of his idols, Fred Maddox of Maddox Brothers and Rose.^[2] Black also developed a "stage clown" persona in the same way that Maddox entertained audiences. Black performed as an exaggerated hillbilly with blacked-out teeth, straw hat and overalls. According to his son, Black said his goal was always to give his audience "a few moments of entertainment and maybe a little bit of humor that'll tickle 'em for a while."^[2]

In 1952, Black began playing club and radio shows with guitarist Scotty Moore. Along with two other guitarists and a fiddler, they performed country music tunes by Hank Williams and Red Foley in Doug Poindexter's band, the Starlight Wranglers.^[3] Black and Moore also played in a band with Paul Burlison, Johnny Burnette, Dorsey Burnette on steel guitar, and a drummer.^[4]

In 1954, Black and Moore were formed into a trio with Elvis Presley.^[5]

The Blue Moon Boys[link]

In July 1954, Sam Phillips of Sun Records asked Black and Moore to play back-up for the as-yet-unknown Elvis Presley. Black played slap bass with guitarist Scotty Moore, while Elvis Presley played rhythm guitar and sang lead.^[6] Neither musician was overly impressed with Presley, but they agreed a studio session would be useful to explore his potential.^[7]

On July 5, 1954, the trio met at Sun studios to rehearse and record a handful of songs. According to Moore, the first song they recorded was "I Love You Because", but after a few country music songs that weren't impressive they decided to take a break.^[8] During the break, Presley began "acting the fool" with Arthur Crudup's "That's All Right (Mama)", a blues song.^[9] When the other two musicians joined in, Phillips taped the song. The upbeat sound was original.^[10] Black remarked, "Damn. Get that on the radio and they'll run us out of town."^[11]

The group recorded four songs during that session, including bluegrass musician Bill Monroe's "Blue Moon of Kentucky", which he had written and recorded as a slow waltz. Sources credit Bill Black with initiating the song, with Presley and Moore joining in. Moore said, "Bill is the one who came up with "Blue Moon of Kentucky."...We're taking a little break and he starts beating on the bass and singing "Blue Moon of Kentucky," mocking Bill Monroe, singing the high falsetto voice. Elvis joins in with him, starts playing and singing along with him..."^[2] They ended up with a fast version of the song in 4/4 time. After an early take, Phillips can be heard on tape saying: "Fine, man. Hell, that's different—that's a pop song now, just about."^[12]

Phillips took several acetates of the session to DJ Dewey Phillips (no relation) of Memphis radio station WHBQ's Red, Hot And Blue show. From August 18 through December 8, "Blue Moon of Kentucky" was consistently higher on the charts, and then both sides began to chart across the South.^[13]

Black and Moore became Presley's back-up group, earning 25% of his takings.^[14] Moore and Black left the Starlight Wranglers after the success of "That's All Right", jealousy within the group forcing them to split.^[15] Their recordings at Sun were released with the credits as "Elvis Presley, Scotty and Bill". The group was later billed as "Elvis Presley and the Blue Moon Boys".

Over the next 15 months, the trio released five singles, toured across the South, and appeared regularly on the Louisiana Hayride. They had originally auditioned for the Opry in October 1954, but they failed to impress the people in charge, or the audience, and were not invited back.^[16]

In 1955, Black went to RCA along with Presley and Moore when Presley's contract was sold to that company. Except for the RCA reissue of "Mystery Train" and "I Forgot to Remember to Forget" ('with Scotty and Bill'), they were no longer credited on record labels.^[17][18]

Black played on early Presley recordings including "Good Rockin' Tonight", "Heartbreak Hotel", "Baby Let's Play House", "Mystery Train", "That's All Right", and "Hound Dog", and eventually became one of the first bass players to use the Fender Precision Bass (bass guitar) in popular music, on "Jailhouse Rock" in the late 1950s.

Black, Moore and drummer D. J. Fontana toured extensively during Presley's early career. Black continued his on-stage "clown" persona and developed comedy routines with Presley. Black's on-stage personality was a sharp contrast to the introverted stage presence of Moore. The balance fit the group's performances.

According to Black's son Louis, Moore said, "Elvis used to just stand up there and not move, and Bill would jump around on the bass. Your daddy would come down through there and get everybody to laughing and loosen them up."^[2] Fontana called Black the mainstay of the band in the early days. "He was a comedian who could warm up a crowd. That was necessary for us because we played for a lot of country crowds that weren't used to people jumping up and down on stage."^[19]

Although both the crowd and Presley enjoyed Black's clowning, Presley's manager Colonel Parker declared that there be no more showing up Elvis. Gordon Stoker told Black, "Hey, man, you've got to cut this out. You're not the star. Elvis is the star."^[2] Black and Moore left Presley on September 21, 1957. Although Black continued to record with Presley until 1958, he and Moore discontinued the band because of poor wages.^[2]

Bill Black's Combo[link]

In 1959 Black joined a group of musicians which became Bill Black's Combo. The lineup was Black (bass), Joe Lewis Hall (piano), Reggie Young (guitar), Martin Wills (saxophone), and Jerry Arnold (drums). There were several personnel changes. While Young was in the army, his position was filled by Hank Hankins, Chips Moman and Tommy Cogbill. Ace Cannon replaced Wills on sax. Carl McVoy replaced Hall in the studio, while Bobby Emmons replaced him on tour.

The band released blues instrumental Smokie for Hi Records in December 1959.^[20] Smokie, Part 2 became a #17 pop hit, and made number one on the "black" music charts.^[2] The song made the Top 20 in the Billboard Hot 100 chart. A follow-up release, White Silver Sands (Hi 2021), was a Top 10 hit (#9) and, like its predecessor, topped the R&B charts for four weeks.^[2][20]

Eight of the recordings by Bill Black's Combo placed in the Top 40 between 1959 and 1962. These were "White Silver Sands" (U.S. #9), "Josephine" (U.S. #18), "Don't Be Cruel" (U.S. #11), "Blue Tango" (U.S. #16), and "Hearts of Stone" (U.S. #20). Advertised as "Terrific for Dancing" their Saxy Jazz spent a record whole year in the top 100.^[2][21][22]

The Combo appeared in the 1961 film The Teenage Millionaire^[23] and on The Ed Sullivan Show, where they performed a medley of "Don't Be Cruel," "Cherry Pink," and "Hearts of Stone", and were voted Billboard's number one instrumental group of 1961.^[2]

Albums with themes included Bill Black's Combo Plays Tunes by Chuck Berry, Bill Black's Combo Goes Big Band, Bill Black's Combo Goes West, and Bill Black's Combo Plays the Blues. The Combo's sound of danceable blues became a popular accompaniment for striptease dancers. Another unique characteristics of the Combo was Reggie Young thwacking on the guitar with a pencil.^[2]

Lyn Lou Studio[link]

In 1962, Bill Black opened a recording studio called "Lyn Lou Studio" (named for his son and daughter)^[24] on Chelsa Street in Memphis, Tennessee, with Larry Rogers (Studio 19, Nashville) as his engineer and producer. Johnny Black, Bill's brother and also upright bass player, who knew Elvis at Lauderdale Courts before Bill, recalls visiting Bill at the studio and reported that Bill would be totally absorbed mixing and playing back tracks.^[25] The studio featured a 1958 Ampex 351 mono tape recorder retired from Sun Studios in 1960, basically just like the one Bill recorded on with Elvis in 1954. Sam Phillips replaced the 2 original Ampex 350's with 2 new Ampex 351's in 1958.^[26] Bob Tucker and Larry Rogers purchased Lyn Lou Studios after Bill Black's death in 1965. The studio recorded many Bill Black Combo albums (now billed as "The Best Honky Tonk Band in America" as well as "The band who opened for the Beatles"), and produced number-one country hits for Charly McClain, T.G. Shepard, Billy Swan and others. The house band for these sessions was the Shylo Band, featuring guitarist/songwriter Ronnie Scaife, nephew of Cecil Scaife, famed Sun Studio engineer.

Early in 1963, Black sent from two to five different versions of the Combo to different regions of the country at the same time, while staying off the road himself, wanting to concentrate on his business, family and his health.^[2]

Ill health and death[link]

In 1963, Bob Tucker joined the Bill Black Combo as a road manager and guitar/bass player.

Black himself had been ill for the past year and a half and unable to travel. Nonetheless, he insisted that the band continue without him. The Bill Black Combo created musical history in 1964 when they became the opening act for the Beatles (at their request) on their historical 13-city tour of America after their appearance on the Ed Sullivan Show. Black himself was not well enough to make the tour.^[2][27]

After two operations and lengthy hospital stays, Black died of a brain tumor on October 21, 1965, at the age of thirty-nine. Black died during his third operation that doctors had hoped would eradicate the tumor once and for all. Black was buried at Forest Hill Cemetery in Memphis, Tennessee. Presley received criticism for not attending his funeral; however, he believed that his presence would turn the funeral into a media frenzy. He decided instead to visit the family privately after the service to express his condolences. According to Louis Black, Presley said, "If there's anything that y'all need, you just let me know and it's yours."^[2]

Black's widow sold Bob Tucker and Larry Rogers both the right to use the name Bill Black's Combo. The band changed to country when it joined Columbia Records, and won Billboard's Country Instrumental Group of the Year award in 1976.^[2]

Legacy[link]

Bill Black's Combo cut more than 20 albums, toured the United States and Europe and won awards as the best instrumental group in America in 1966 and 1967. Bob Tucker worked for the University of Memphis as Professor of Music Business as well as being leader of the Best Honky Tonk Band in America.

Black's stand-up bass is today owned by ex-Beatle Paul McCartney, who received the instrument as a birthday present from his late wife Linda McCartney in the late 1970s. The bass can be seen in the video clip to McCartney's song "Baby's Request". In the documentary film The World Tonight, McCartney can be seen playing the bass and singing his version of "Heartbreak Hotel". In 1995, he played it on "Real Love", the last "new" Beatles record (one of two in which McCartney, George Harrison and Ringo Starr overdubbed a full arrangement onto a John Lennon home recording from the late 1970s). In 2005, Clay Steakley portrayed Black in the Elvis Presley biopic miniseries Elvis.

On April 4, 2009, Bill Black was inducted into the Rock and Roll Hall of Fame.

See also[link]

• List of bass guitarists
• List of Precision Bass players
• List of artists who reached number one on the Billboard R&B chart
• List of notable brain tumor patients

References[link]

External links[link]

• Rockabilly Hall of Fame
• MSN Entertainment
• AllMusic Guide
• Blackie - Bill Black & Elvis

The Books were an American duo, formed in New York City in 1999, consisting of guitarist and vocalist Nick Zammuto and cellist Paul de Jong. Their releases typically incorporate samples of obscure sounds and speech.^[1][2] They have released three critically acclaimed albums on the German label Tomlab, and released their fourth studio album, The Way Out, on Temporary Residence Limited in July 2010.

History[link]

[edit] 1999–2002: Thought for Food

Zammuto and de Jong first met in New York City in 1999 as they shared the same apartment building.^[3] De Jong invited Zammuto to dinner at his apartment, where he played him some of his collection of audio and video samples, including a Shooby Taylor record.^[4] Zammuto said of their meeting that "we both kind of knew at that moment that we listened (to music) in interesting ways and had similar approaches to music."^[5] Soon after, they began playing what they considered to be pop music, in comparison to their own works, under the name The Books.^[5]

In 2000, The Books started work on what would become their début album Thought for Food.^[6] Zammuto and de Jong moved locations constantly during this time,^[6] recording in New York, Los Angeles, Boston, and finally in the basement of a hostel in North Carolina where Zammuto worked for a while after hiking the Appalachian Trail.^[5][7]

Thought for Food was released on October 22nd, 2002.^[8] Praised by critics for its distinctive sound,^[9] it featured extensive sampling from obscure sources coupled with mostly acoustic instrumentation.

[edit] 2002–2003: The Lemon of Pink

Shortly after the release of Thought for Food, the band relocated to North Adams, Massachusetts, near where Zammuto had graduated from Williams College in 1999, studying chemistry and visual arts.^[10] Zammuto and de Jong began the recording of The Lemon of Pink around this time. Anne Doerner, a guest vocalist on the album, said the process was much more arduous than the recording of Thought for Food, with Zammuto working on the album for five straight months.^[5]

The Lemon of Pink was released to critical acclaim^[11] on October 7th, 2003.^[12] It is similar in style to Thought for Food, but oriented more around vocals performed mostly by Anne Doerner.

[edit] 2003–2006: Lost and Safe, Music for a French Elevator, Prefuse 73 Reads The Books

In 2004, the French Ministry of Culture asked The Books to compose music for a new elevator in their building. The Books released a Mini CD of this work in 2006, under the name Music for a French Elevator and Other Short Format Oddities by the Books.^[13]

On April 5, 2005, The Books released their third studio album, Lost and Safe. Zammuto has a greater vocal presence in this album, and the album was criticized for this change of sound.^[14] Aside from this, Lost and Safe was well received by critics.^[15] Throughout early 2005, The Books collobarated with the electronica artist Prefuse 73. The Books appear on his album Surrounded by Silence ("Pagina Dos"), and the E.P. Prefuse 73 Reads the Books E.P. collects remixes of material sourced from The Books' albums.

Before starting a three-month^[16] tour of North America in April 2006, The Books had played only one concert,^[7] in October 2003 at a festival in Chicago, Illinois.^[17] Zammuto has expressed apprehensiveness towards touring, but says it is necessary to make a living, given his belief that people downloading The Books' music via file-sharing^[18] has put him under financial strain.

[edit] 2006–2012: Hiatus, The Way Out and break-up

Following the release of Music for a French Elevator, the band took a break from recording to tend to their new families, tour in support of their albums, and pursue some of their own projects, which included Zammuto scoring a feature documentary about the Biosphere 2.^[10]

In 2007, The Books released Play All, a DVD of thirteen music videos and three previously unreleased tracks.^[19] The Play All videos are composed of found footage transformed into a collage that matches their music. The Books often screen these videos during their live performances.^[20]

The Books toured heavily between 2005 and 2007, including two tours in Europe and two Canadian shows.^[6] In early 2009 The Books covered the Nick Drake song "Cello Song" in collaboration with José González for the Red Hot Organization's Dark Was the Night fund-raising album.^[21]

The Books began working on The Way Out in late 2008.^[22] Zammuto spoke of the album's New Age themes in an interview in April 2009, saying they took samples from self-help and hypnotherapy cassettes. When asked to describe the album, Zammuto said "You're getting verrry sleepy."^[3] On April 5, 2010, the duo announced that The Way Out would be released through Temporary Residence Limited in July.^[22] On April 27 Pitchfork Media began streaming the track "Beautiful People",^[23] which Zammuto described as "a three part christian harmony mixed with a sort of euro-disco-trash beat, an orchestra’s worth of sampled brass and lyrics about the twelfth root of two (my favorite irrational number), trigonometry and tangrams".^[24] The album was released on July 20.

The Books played the ATP New York 2010 music festival in Monticello, New York, in September 2010 and are currently touring North American tour with the Black Heart Procession. The band have been chosen by Portishead & ATP to perform at the ATP I'll Be Your Mirror festival that they will curate in July 2011 at London's Alexandra Palace.^[25]

In January of 2012, Nick Zammuto announced in an interview via Pitchfork Media that The Books were splitting up to focus on other projects.^[26]

On April 3rd 2012, Nick Zammuto released Zammuto, under the moniker Zammuto.

Musical style[link]

The Books are commonly cited by critics to be of a genre of their own,.^[27] Zammuto has described it as collage music.^[18] Paul de Jong described it as "the new folk music...[w]e make our own instruments, use our own libraries of sound bites while trying to create something universally human."^[28] Although they have said that their influences include Nirvana, David Bowie, Roxy Music as well as new wave and classical music, these do not show prominently in their music,^[29] though Zammuto was directly influenced by electronic musicians Squarepusher, Aphex Twin and Boards of Canada.^[30][31] The Books' music usually consists of acoustic instrumentation of folk melodies usually played on guitar, cello, banjo and more, combined with a diverse range of samples obtained from cassettes found in thrift stores,^[18] which are digitally processed and edited.^[5] They also rarely use a drum kit in recordings and performances, instead favouring inanimate objects like children's toys and filing cabinets, which are sampled and looped.^[29] Some observers contend that their music is aleatoric,^[32] but Zammuto has disagreed, saying the music is very tightly controlled.^[18]

Discography[link]

Studio albums[link]

• Thought for Food (2002)
• The Lemon of Pink (2003)
• Lost and Safe (2005)
• The Way Out (2010)

EP[link]

• Music for a French Elevator and Other Short Format Oddities by the Books (2006)

DVDs[link]

• Play All (2007)

References[link]