Lehman Brothers, an investment banking company, filed for bankruptcy in September 2008 due to poor financial choices. The company has made many bad decisions due to their greed and unethical decision to manipulate the books. The failure of Lehman Brothers shows that it is imperative to be obvious when it comes to financial reporting. The bankruptcy shows that they failed to use factual figures by masking their true financial situation. The analysis of Lehman Brothers will show the unethical financial reporting acts and the effect they had on this financial banking company. Lehman Brothers' problems became evident as the housing bubble burst. Lehman took more risks, ignoring the truth, and began shedding overvalued assets. They did not want to lose investor confidence and therefore declared assets that had little or no value. “Lehman Brothers' balance sheet grew rapidly beginning in 2006 and included many long-term investments financed by short-term borrowing.” (Examiners Report, 2010 Vol. 1 pp.3-4) The unethical approach taken by Lehman in manipulating the books would lead any financial company to ruin. The 105 repurchase transactions used by Lehman Brothers represented sales, which allowed them to withdraw certain assets. and balance sheet liabilities; leading to a drop in their leverage ratio. Lehman increased its 105 repurchase transactions around quarterly reporting to the Securities and Exchange Commission (SEC) to minimize leverage ratios. In doing so, they demonstrated convincing financial situations which, in reality, did not prevail. Lehman raised cash by signing a short-term note and pledging collateral assets for the loan. Lehman continued to...... middle of document ...... recognizes that technical compliance with certain GAAP rules can lead to misleading financial statements, and imposes an overall requirement that the statements as a whole fairly reflect the financial situation of the company. » (Examiner Report, 2010, Vol. 3, p. 964) The accounting choices made masked the real problems that made bankruptcy the only alternative for Lehman Brothers. Presenting accurate financial statements will enable counterparties to make informed decisions, regardless of the outcome. In 2002, the Sarbanes-Oxley Act was passed by Congress in response to the large number of business scandals. It largely consists of new rules and regulations for accounting firms with the aim of reducing fraud in accounting practices. Failure to comply with this injunction could result in a fine and imprisonment, or both...