Accounting Who's Counting?

On paper, Miniscribe certainly looked like a highflyer. The Colorado-based company's financial statements in the mid-1980s painted it as a vigorous, healthy computer-parts maker with a bright future. But an internal investigation drew quite a different picture. The probe uncovered massive fraud by senior managers, who shipped boxes of bricks labeled as disk drives and counted them as sales. Investigators blamed executives for the company's cooked books, but bondholders also sued Miniscribe's auditors, Coopers & Lybrand, for conducting faulty audits. In February a jury stunned the accounting profession by ordering C&L to pay damages of $200 million. It was the largest...