Adelphia Communications Corporation – Fraud Case In 2002, Adelphia Communications Corporation faced a massive accounting scandal that led to the company's bankruptcy and subsequent reorganization. This paper will attempt to identify, analyze and evaluate the consequences of financial misrepresentation at corporate, industry and economic levels. Furthermore, it will attempt to examine the factors influencing business failure from an auditor's perspective and will consider measures the auditor could have taken to enable the quality and completeness of information communicated to external users. History: In 1952, John Rigas paid $100 for a cable TV franchise in Pennsylvania and ran it like a small family business with only 25 customers. (Bennett, Thau, Scouten, 2005) The business was expanding and in 1972 the company was officially incorporated as Adelphia Communications Corporation. Shortly thereafter, in 1986, Adelphia began trading publicly on the NASDAQ stock exchange. In the 1990s, in light of the weakening cable industry, Adelphia began to expand into Internet access, paging services, and corporate telecommunications for which it used cash, stock, and debt to finance numerous acquisitions. (Bennett, et al) Adelphia's fraud was finally exposed in March 2002, when Tim Rigas, the company's chief financial officer, revealed that Adelphia owes $2.3 billion in loans made to companies run by the Rigas family. This revelation led to the SEC investigation that uncovered fraud activity dating back to mid-1999. Shortly thereafter, all members of the Riga family resigned from Adelphia. When Adelphia's fraud was finally discovered in March 2002, its stock price went from 28 cents to 79 cents within a month. (Bennett, et al) Fraud… half the paper… and settled the charges by paying $50 million. Although the allegations and wrongdoing of Deloitte's auditors have never been proven in court, it is quite clear that Deloitte indeed had its share of blame in the Adelphia fraud. In particular, Deloitte did not adequately investigate the relationship between the Riga family and Adelphia Communications Corporation, thus starting the fraud. Furthermore, Deloitte's independence in this assignment is questionable, considering that Deloitte has been Adelphia's external auditor for over 15 years. Therefore, auditors, as crucial actors and custodians of any company's financial reporting, should maintain as much as possible unsurpassed independence, in fact and in appearance. Furthermore, as effective and responsible professionals, auditors should always maintain their integrity despite any pressure from management or executives.