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1984 Richard M Scrushy the former CEO of HealthSouth Corporation founded HealthSouth in Little Rock Arkansas In 1985 Scrushy moved the company to Birmingham Alabama A year later HealthSouth went public Scrushy used his powerful sales skills infinite energy and entrepreneurial skills in setting up clinics making acquisitions and expanding the company Eventually HealthSouth became the largest provider of ambulatory surgery and rehabilitative health care services in the United States with 1700 facilities and 51000 employees By 1988 HealthSouth had expanded to nearly 40 facilities in 15 states The company acquired most of the rehabilitation services business of National Medical Enterprise and became the largest provider of rehabilitation services in 1993 HealthSouth was generating revenues of 400 million and operated 145 clinics HealthSouth further expanded into inpatient rehabilitation hospitals and outpatient surgery centers and became the largest physician practice management in the country By 2000 the company was dominated the rehabilitation services market and was very profitable Hoovers 2013 In 2003 the Securities and Exchange Commission accused HealthSouth Corporation and Scrushy of inflating earnings by 14 billion since 1999 That same year Scrushy face a federal grand jury and was indicted with 85 counts including conspiracy securities fraud money laundering and charges related to overstating HealthSouths earnings by nearly 30 billion Heylar 2003 Federal investigators say that the company overstated earnings to meet analysts earnings estimates while hiding the accounting fraud from the auditors Securities and Exchange Commission 2003 In this research paper I will address recommendations on what internal controls may have prevented this illegal act address recommendations on the prevention of this action from re-occurring how the problem was handled whom suffered because of this illegal action the charges and punishments and the impact for accountants policy makers legislatures etcHealthSouths management had been able to fabricate its financial statements since the company went public in 1986 because it had overridden most internal controls and daunted the external auditors When the fraud was
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