HealthSouth Corporation Case: 1. What were the underlying reasons for economic motivation for the fraud? a.

Richard Scury needed his business to continue to prosper even when it was not. b. Richard scury scared people forcing them to alter accounting ledgers. c. Greed 2. What was the specific nature of the fraud? Which financial statements were in accurate due to the fraud? a. Falcifying of accounting documents. Specifically making etries small enough auditors would not see them. Crediting revenue that was not there and debiting assests that did not exsist. b. 3. Who were the HealthSouth external, independent auditors? What were they paid in fees for 2001? 4. Did the external auditors uncover the fraud? Why or why not? If not, how was the fraud uncovered? 5. Were any employees criminally indicted, and, if so, what were their positions with HealthSouth Corporation? a. Yes, over 17 were indicted once they came forth to Alice Martins people with the FBI. b. 6. Has anyone gone to jail over the fraud? If so, who and how long? a. Aaron Beam, Cofounder and Original CFO sensenced to 3 months b. Bill Owens, Chief Accountant sentenced to 5 years c. Mike Martin, superceaded CFO Aaron Beam, 3 years 7. What were the consequences of the fraud to stock investors in HealthSouth Corporation? a. 8. What financial metrics (ratios) might have pointed to the fraud before it was discovered? a. The millions of dollars that was not actually present.

9. What is the hindsight bias and how might it affect your answer to the previous question? a. The cooking of the books was done well. 10. What, if any, lessons can we learn from this fraud? a. Fraud is not worth doing. It can have serious consequences on everyone.

K. Adam Mattox HealthSouth Corporation Case

Introduction: HealthSouth Corporation fraud case involves falsefiying accounting documents.

3. Analysis This should include an explanation of any conceptual tools or theory used and summary of any computational analysis. Put detailed computations in item 7. 4. Alternatives or Issues Identified Discuss Pros and Cons of each significant alternative or issue. 5. Solutions/Recommendations With Justification 6. Discussion Of What Was Learned By Completing Case [Personal reflective analysis] 7. Supporting Exhibits/Tables/Figures 8. References Utilized