Healthsouth Corp.

Topics: Corporate governance, Board of directors, HealthSouth Pages: 16 (4495 words) Published: July 30, 2013
COMSATS INSTITUTE OF INFORMATION TECHNOLOGY

CORPORATE GOVERNANCE : ACCOUNTING SCANDAL

SUBMITTED To : Sir. Javaid Zafar

Submitted by :

Sana Munir
MBO - II

CORPORATE GOVERNANCE

TABLE OF CONTENTS
1 COMPANY INTRODUCTION AND HISTORY................................... ...3 2 CORPORATE BUSINESS ACTIVITIES..............................................6 2.1 Rehabilitation Hospitals.................................................................6 2.2 Outpatient Therapy Services........................................................ ...6 2.3 Long Term Acute Care Hospital ......................................................6 2.4 Home Health...................................................................... ............6 2.5 Rehabilitation Technology......................................................... ......7

3 ACCOUNTING SCANDAL............................ ..................................8 3.1 To Meet Wall Street’s Expectation...................................................8 3.2 Insider Trading...................................................................... .........9 3.3 Personal Profit...................................................... .......................10 3.4 Hiding the Fraud: To Restructure........................................ ...........10

4 DETECTION OF ACCOUNTING FRAUD........................ ..................12 4.1 Red Flags .................................................................................................. .......12

5 PENALTIES FOR FRAUD............................. ................................13 5.1 Richard Scrushy............................................. ..............................13 5.2 Chief Financial Officers Charges..................................... ...............13

6 AUDITOR’S ROLE IN FRAUD................................. ......................15 6.1 Ernst and Young Auditors .......................................................... ...15 6.2 FEES paid to E&Y for services....................................................... .16 6.3 Charges or penalties for E&Y........................................................16

7 BOARD OF DIRECTORS.......................................................... ....17 7.1 Healthsouth Board Viewed As Beholden To Scrushy........................17 7.2 Doubts Created .................................................................................................. .......17 7.3 New Members In Board Of Director .................................................................................................. .......18

8 CORPORATE SOCIAL RESPONSIBILITY........................................19 9 CONCLUSION................................. ..........................................20

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CORPORATE GOVERNANCE

1 COMPANY INTRODUCTION AND HISTORY
Healthsouth Corporation is the leading provider of medical rehabilitation health care and outpatient surgery services in the United States. With more than 1,900 locations in the United States, the United Kingdom, and Australia, Healthsouth provides physical and other therapy in its rehabilitation facilities, offers imaging services through its diagnostic centers, and provides nonemergency surgical services at its outpatient surgery centers. The company also has occupational medicine clinics that deal exclusively with patients suffering from work-related health conditions. Healthsouth has contracts with managed care plans, insurance companies, and major corporations, including Wal-Mart and Goodyear. Healthsouth also has alliances with professional sports associations and schools to supply rehabilitative and sports medicine services. A New Twist on Rehabilitation Services: 1980s Healthsouth was being established by the idea of Richard Scrushy. Before the establishment of the Healthsouth, the previous rehabilitation companies were proceeding with stereotype functions. But Healthsouth added new rehab centers to its chain throughout the middle...
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