Unethical Practice by Computer Sciences Corporation

Unethical Practice
Unethical Practice

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Unethical Practice by Computer Sciences Corporation

Ethics & Finance Paper


            This paper discusses one of the most significant illegal and unethical practice which had been caused by Computer Sciences Corporation for which the company and its management was also charged by the US government. This is known as the Medicaid fraud under which the company had been involved in two fraudulent schemes. Both of these schemes had used the computer programs for circumventing the requirement that once the private insurance coverage becomes exhausted then only the billing of the Medicaid should be performed (Office, 2014).

Along with these two schemes, the third fraud scheme focused on the use of the defaulting. Under this scheme the company had falsified all the diagnosis codes which had been submitted systematically to Medicaid. This paper analysis this issues with specific emphasis on Sarbanes Oxley Act 2002.

Mistakes made by Computer Sciences Corporation

            The main problem of Computer Sciences Corporation is that the company has good people but they all are poorly managed. The employees of the company are rated by those people who do not work with the employees on a regular basis. The appraisers at Computer Sciences Corporation are not the day to day supervisors but they are outside managers who have just a single role which is to rate all the employees in specific jobs.

Apart from this, the mid-level managers at Computer Sciences Corporation who have never interacted with the employees of the company had to forcefully downgrade the performance ratings of their employees in order to meet the required 40% quota level (Anna, 2013). This is highly unethical practice and these are the mistakes which resulted in the above fraudulent schemes.

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Steps which could have been taken

Some of the steps which could have been taken to avoid such unethical practice are:

  • The day to day supervisors should have been tasked with appraising the employees.
  • Managers need to interact and know their employees and learn about their traits. There are certain traits which can indicate a manipulative behavior.
  • Supervisors need to listen and observe the employees to identify the risks of the potential fraud.
  • All the people working within the organization should be clearly made aware of the fraud, its different types and the reporting system.
  • The internal control should be made stronger by the leaders of the company. Examples of such internal controls which could have avoided the unethical practice to occur at Computer Sciences Corporation are segregation of the duties, supervision and documentation. The documentation seems to be weak at Computer Sciences Corporation.
  • Finally, a positive corporate culture needs to be created at Computer Sciences Corporation where the employees should be satisfied and work in a positive work environment to prevent theft and fraud.

Role of Market Pressures on Unethical Practice

            There are many arguments that the role of the market pressures and the competition in the market can cause the firms to engage in unethical practice. This is because unethical practice can lower the costs of the firm. For example, when companies make use of child labor then they can hire such labor at cheap rates and lower its costs but this is highly unethical and even illegal in many countries.

Competition could only raise the ethical standards in a long run however, companies engage in unethical behavior to make their firm more competitive in the short run  (Miller, 2015). Therefore, when competition starts to increase in the market based on any factor such as market share, stock prices, cost structures etc, then firms indulge in unethical behavior to remain competitive in the market.

Influence of Finance

            Finance also plays an important role in pressurizing the firms to conduct unethical behavior. When companies compete with one another then they compare their performance on the basis of their profitability, shareholder wealth, stock prices, and growth in EPS etc. However, when the financial performance of firms is deteriorating due to any external factor, then indulge in unethical and fraudulent practices such as creative accounting. The case of Computer Sciences Corporation for devising its three fraud schemes is also an example of creative accounting. For example, when the company had falsified all the diagnosis codes which had been submitted systematically to Medicaid is a true example of creative accounting.

Influence of Sarbanes Oxley Act of 2002

            The Sarbanes Oxley Act had been enacted in 2002 after a series of the corporate scandals and financial abuses to make the corporate governance systems strong and enhance the compliance and ethics programs. The major influence of this act has been in the role of the leadership in an organization to avoid fraudulent and unethical behaviors. This act had defined the responsibilities for CFO and the CEOs and also enhanced the engagement and professionalism of the audit committees.

This act had guided the best law to guide he best practices within the board room. It has also enhanced the focus of the regulators and state courts and most importantly increased the consciousness of the public in raising the standard of corporate governance in firms.

Recommended Changes for Companies

Some of the recommendations for the companies to avoid financial statement fraud and present the financial statements to the public are as follows:

  • Internal controls need to be made strong to detect any action or unusual behavior by those who prepare the financial statements of the company.
  • All the main accounting functions should be segregated and measures should be taken to reduce the incentives for the fraud.
  • A strong control environment should be created which should be controlled by the top management to ensure best corporate governance practices.
  • Finally, management should also conduct the examination of its financial statements by an outside consultant. This will help the company to avoid behaving aggressively for committing unethical practices.


            Overall, the Sarbanes Oxley Act 2002 is the best guide for Computer Sciences Corporation in order to avoid the unethical treatment of its employees and prevent the fraudulent activities which have taken place in the past. Sarbanes Oxley Act 2002 has reshaped the corporate America today. Computer Sciences Corporation needs to pay close attention on its internal controls, segregation of the duties, supervising its employees, appraising the employees through their day to day supervisors and promoting the best practices of corporate governance.

The main issue currently faced by Computer Sciences Corporation is that the company is the unethical treatment of its employees. Human Resource Management is the key aspect of any organization and all the employees should be given more independence and freedom in decision making. Finally, whistle blowing should be encouraged within the organization as this would overcome the problem of fraud. Whenever there would be any sort of unusual activity or unethical behavior, the employees would have a route to report that and save the company from severe allegations.


Anna. (2013, Dec 12). Allegations of unethical and illegal behavior by CSC. Retrieved July 13, 2016, from Cassandra: http://www.corporatecrimereporter.com/news/200/computer-sciences-corporation-charged-medicaid-fraud/

Miller, R. (2015). DOES ECONOMIC COMPETITION DESTROY ETHICAL BEHAVIOR? Retrieved July 13, 2016, from Firstthings: http://www.firstthings.com/blogs/firstthoughts/2011/07/does-economic-competition-destroy-ethical-behavior

Office, U. A. (2014, October 27). Manhattan U.S. Attorney Files Healthcare Fraud Lawsuit Against Computer Sciences Corp. And The City Of New York For Orchestrating A Multimillion-Dollar Medicaid Billing Fraud Scheme. Retrieved July 13, 2016, from Justice.gov: https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-files-healthcare-fraud-lawsuit-against-computer-sciences-corp-and

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