Table of Contents 1.0 Introduction 1 2.0 Discussions 3 2.1 Leadership and Culture 5 2.2 Internal Control 8 2.3 Internal Audit 13 2.4 External Audit 16 2.5 Board of Director (BOD) 19 3.0 Conclusion 21 4.0 Biliography 22

1.0 Introduction WorldCom is a profit organization that specialized in local, long distance and international plans, high cable internet, prepaid cards, and provided telecommunications to customers nationwide with business corporations making up the majority of the 20 million customers they served. LDDS began operations in 1984 offering services to local retail and commercial customers in the southern states. It was initially a loss making enterprise, and thus hired Bernie J. (Bernie) Ebbers to run things. It took him less than a year to make the company profitable. By the end of 1993, LDDS was the fourth largest long distance carrier in the United States. After a shareholder vote in May 1995, the company officially came to be known as WorldCom. WorldCom primary business goal was to achieve long term revenue-growth by maintaining the achievement of E/R ratio. However, the industry began to deteriorate in 2000 due to economic recession and other reasons, such as overcapacity and heightened competition. Despite the falling in revenue, the management of WorldCom tend to manipulate the accounting entries by accrual releases and capitalization of line cost in order to achieve the targeted performance. The scheme lowered line costs (the company’s largest single expense) by capitalizing them as “prepaid capacity” and reversing allowances without sufficient justification. The corporate motive for this fraud was to meet Wall Street’s expectations for growth and also to hide real, deteriorating operative results, which were caused by the bursting dot-com and telecom bubbles.

Apart from this, there were a lot of problem that arises from the