WorldCom where being talked by lamplight and bundling as Enron is a lot of in topic of accounting fraud. However, the volume of information that can be obtained in Japanese is far less compared with Enron. The fact relevance makes the description of the case a base. WorldCom is a huge telecommunication company that exists in the United States before. The company that Mr. Bernard Ebbers founded in 1983 accomplishes the rapid growth repeating M&A with tremendous force. Long-distance telecom carrier and MCI in the fourth place in the U.S. at that time are purchased in 1996. At that time, this was the maximum M&A play in the history of all Americans.
The stop of the United States Department of Justice hangs from the fear of the Antimonopoly Law collision though having seen shadow at height of the power of WorldCom schemes the purchase of Sprint of a major carrier for 1999 years. Time is done similarly, and it cracks to the recession ripple the telecom industry in the United States. The expansionary course is corrected through necessity, and the strategy of WorldCom starts straying.

There was a business objective "ROE42% defending to the last" (so high!) in WorldCom. However, the maintenance becomes difficult, and comes to begin the fraudulent accounting procedure gradually as for the fold of the recession.

Worldcom's scheme of a/c fraud is very simple, 1) counted as assets for rental fee of networking but it should be cost 2) padded up about earnings using Accrual Account. It is a great difference compared with a complex scheme to make good use of SPE of Enron.

To make up such simple scheme, Worldcom's obstruction construction to internal audit & Audit corporation is terrific that. I felt a chill when reading.
To against Andersen's audit team, inconvenient information is a falsification of the book on the deletion and millions of dollar entire scale it is possible to hold not put out even if it puts it out, the access inhibit to the interview refusal of finance to VP and the accounting system and connected accounting system and demanded documents... With this, it doesn't become an audit.

It is in chiefly the following three points that Andersen were poor.

First, the point that the audit that corresponded to the risk was not held.
The audit evaluates the risk of the company, and turns on the audit resource to the area where the risk is high intensively as a result. Andersen's risk evaluation at that time is "maximum". There is usually so no maximum. Because the part where can control of the company is a little when the risk is high though it is natural. However, Andersen seems only to have been following a procedure average risk evaluation "moderate" ,in a word, to the general company.

Next, failure of analytical procedure.
Andersen's inspector seems to have judged it was unquestionable from "Abnormality change does not seen compared with the period beforehand at the first term" of the result of the analysis. Not appearing is natural because Worldcom change it in the level of 42% ROE every year as the above-mentioned. The achievement of the other organization of a like nature thoroughly traced the downward curve at the same time. Such judgment is too poor.

Third point is a problem of posture in the end to the company.
WorldCom was "Crown Jewel" for Andersen. Because it was status with the huge gorilla like WorldCom in the client in a word. To want to actually maintain a long-term relation, it seems to have claimed the audit fee few. Such a conception has this industry even in no old times it.

The company is reported on the amount of summing up of capital expense of false to Board Meeting besides the audit, without security lends, guarantees the debt to Ebbers CEO that was not able to pay the additional warrant money by doing the margin trading by the company's own stock, and it is already confused. The company of sales of 30 billion dollars was completely peculated.

After all, the injustice of WorldCom is revealed in 2002 by Ms. Cooper who was the internal audit department general manager. Indeed 80 billion dollars or more are the losses from 100 billion dollars total assets, 7 billion dollars are excessive summing up of a earn before tax from 1999 up to 2002, and WorldCom goes bankrupt. Kingpins named Ebbers CEO and Sullivan CFO will receive the judgment of the law one after another. By the way, Ms. Cooper is chosen to be one of "Persons of the year" in 2002 of the Time magazine.

A good writer also was a certain one, had the concern for the topic when a lot of cases were read, and this case was able to read with pleasure indeed. There are a lot of descriptions that CFO threaten to Ms. Cooper to abandon the audit of capital expense, plot the detention construction of the accounting person in charge who dislike illegal processing and to resign, and so on.

And, internal audit person in charge especially knowls the system in details invated the accounting system using illegal access pass (it seems that company does not controlled security), download in CD-ROM at small room without window to avoid destruction of evidence... such story is instrusting by humanizum. "sociable Papa who has three children"... such information is not need for case, but make realize reader as it is realistic story.

It is Board as doll, top without ethics, pressing business culture, the corporate governance which doesn't work, and an opaque accounting treatment... WorldCom has many danger elements in the audit. It can be said the best case as a case study of the audit theory, but I want never to be related each other.

It is said by Mr. Myers who is Financial Controller in the end.
"The entries (illegal sort) should not have been made, but once it had started, and it was hard to stop"
Window-dressing is the same as the drug. It doesn't stop when doing once. We should avoid such situation.