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AIG Scandal
33
American Insurance Group
By Nick Esau
Hank Greenburg
Thomas Baxter Jr
Gaap Rules
Bob Lewis
Principle of objectivity: They did not have real physical evidence to support their records
Matching Principle: This was the most prominent one they broke because they did not come close to matching their expenses and revenues due to the false recording of revenues
Conclusion
AIG was an extremely powerful and successful company and eventually they began to get greedy and tried to sneak in more money, they got caught which led to a seies of events that resulted in them almost failing and having to get bailed out, the CEO at the time and majority of other conspirators are now gone and replaced.
Current position
AIG began to fail and they eventually had to get a 85 billion dollar loan from the government, this led to 80% of the company being owned by the government but they are still functioning today.
Who was involved
What happened: AIG recorded roughly two billion dollars worth of false revenue instead of recording it for various things such as expenses, they also did other smaller things such as hide transactions in financial documents. They also illegally increased their depreciation rates on what they owned.
Hank Greenburg: CEO of AIG so was the main organizer of the scandal and tried to defend their wrongdoings.
Thomas Baxter Jr: Kept the details of the financial records under wraps from the public.
Bob Lewis: Had to manage the risk and chances they were taking.