...Home Page» Business and Management World Com In: Business and Management World Com 9-104-071 REV: SEPTEMBER 14, 2007 ROBERT S. KAPLAN DAVID KIRON Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late. — Richard Thornburgh, former U.S. attorney general1 On July 21, 2002, WorldCom Group, a telecommunications company with more than $30 billion in revenues, $104 billion in assets, and 60,000 employees, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Between 1999 and 2002, WorldCom had overstated its pretax income by at least $7 billion, a deliberate miscalculation that was, at the time, the largest in history. The company subsequently wrote down about $82 billion (more than 75%) of its reported assets.2 WorldCom’s stock, once valued at $180 billion, became nearly worthless. Seventeen thousand employees lost their jobs; many left the company with worthless retirement accounts. The company’s bankruptcy also jeopardized service to WorldCom’s 20 million retail customers and on government contracts affecting 80 million Social Security beneficiaries, air traffic control for the Federal Aviation Association, network management...
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...9-104-071 REV: SEPTEMBER 14, 2007 ROBERT S. KAPLAN DAVID KIRON Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late. — Richard Thornburgh, former U.S. attorney general1 On July 21, 2002, WorldCom Group, a telecommunications company with more than $30 billion in revenues, $104 billion in assets, and 60,000 employees, filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. Between 1999 and 2002, WorldCom had overstated its pretax income by at least $7 billion, a deliberate miscalculation that was, at the time, the largest in history. The company subsequently wrote down about $82 billion (more than 75%) of its reported assets.2 WorldCom’s stock, once valued at $180 billion, became nearly worthless. Seventeen thousand employees lost their jobs; many left the company with worthless retirement accounts. The company’s bankruptcy also jeopardized service to WorldCom’s 20 million retail customers and on government contracts affecting 80 million Social Security beneficiaries, air traffic control for the Federal Aviation Association, network management for the Department of Defense, and long-distance services for both houses of Congress and...
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...WorldCom Tarrell King University of Phoenix Week 1 Assignment August 18, 2009 Between 1991 and 1997, Bernie Ebbers, the CEO of WorldCom, spent $60 billion by successfully completing 65 acquisitions. The two most prominent acquisitions were the MFS Communications acquisition that enabled WorldCom to obtain UUNET. UUNET was a major supplier of Internet services to business. The second major acquisition was MCI Communications because they became WorldCom’s largest provider of business and consumer telephone service. From 1983 to 2002 WorldCom developed from a humble long distance telephone company to the second-largest long distance telephone company in the United States and one of the largest companies handling worldwide Internet data traffic, and finished as the largest bankruptcy of an organization in American history (Moberg, 2008). The purpose of WorldCom was to provide mission-critical communication services for tens of thousands of businesses internationally. WorldCom owned and operated 75 data centers on five continents. The organization owned and operated a global Internet Protocol backbone that provided connectivity in more than 2,600 cities and in more than 100 countries. Before the bankruptcy of the organization, WorldCom carried more international voice traffic than any other company and carried a significant amount of the world’s Internet traffic. Bernie Ebbers and the managers of his company were supposed oversee the activities of WorldCom and ensure...
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...Woldcom’s Whitleblower: 1-which of Kohlberg’s six stages of moral development would you say that Cynthia cooper had reached? Explain. She has reached the universal ethical orientation in which the meaning of right is explained by the decision of conscience in accord with self-chosen ethical principles appealing the logical comprehensiveness and universality. This stage is also concerned of universal principal of justice, equality of human rights will respect for the dignity of human beings as individuals persons. 2- Do her actions and motives support of undermine carol Gilligan’s views? What would you say is unique about her or what she did? Carol said that there are male and female approaches to the morality. The morality of women is primarily a matter of caring and responsibility, their moral development is progress toward better ways of caring and being responsible. Women move from a preconventional stage of caring for oneself to another conventional one of caring for others to neglect of oneself, to a postconventional stage achieving a balance of caring of oneself and others also. On June 20, 2002 The Cynthia cooper courageously met with the audit committee of WorldCom’s board of directors and she told them what had been done by the Scott Sullivan, David Myers and Arthur Andersen. The first two who were arrested and second shut down for shredding evidence of other accounting frauds at other firms. What I find very unique about her is her honesty and putting all the...
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...WorldCom Case Study Update 20061 by Edward J. Romar, University of Massachusetts-Boston, and Martin Calkins, University of Massachusetts-Boston In December 2005, two years after this case was written, the telecommunications industry consolidated further. Verizon Communications acquired MCI/WorldCom and SBC Communications acquired AT&T Corporation, which had been in business since the 19th Century. The acquisition of MCI/WorldCom was the direct result of the behavior of WorldCom's senior managers as documented above. While it can be argued that the demise of AT&T Corp. was not wholly attributable to WorldCom's behavior, AT&T Corp.'s decimation certainly was facilitated by the events surrounding WorldCom, since WorldCom was the benchmark long distance telephone and Internet communications service provider. Indeed, the ripple effect of WorldCom's demise goes far beyond one company and several senior managers. It had a profound effect on an entire industry. This postscript will update the WorldCom story by focusing on what happened to the company after it declared bankruptcy and before it was acquired by Verizon. The postscript also will relate subsequent important events in the telecommunications industry, the effect of WorldCom's problems on its competitors and labor market, and the impact WorldCom had on the lives of the key players associated with the fraud and its exposure. From Benchmark to Bankrupt Between July 2002 when WorldCom declared bankruptcy and April...
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...The accounting fraud at WorldCom was the result of corporate supremacy, individual liability, and an ultimate collapse of their system of in-house controls that can all be attributed to greed, manipulation and a lack of accountability for top executives. Bernie Ebbers, at the helm of it all, lacked focus, strategic direction, and led WorldCom with a consistently declining moral compass. It is thought that the ethical turn down of WorldCom’s top executives began with the U.S. Justice Department’s refusal to allow WorldCom’s 1999 attempted acquisition of Sprint. WorldCom senior management noted that large scale mergers no longer constituted feasible means of expansion and the company began to shift into an abyss of monumental proportions. Operating major departments in various locations, WorldCom had no real continuity among its corporate offices. Its attorneys, upon whom they should have relied on for principled and legal counsel, were essentially without influence. Policies were not written and employees were dared to challenge their superiors. An environment of fear was established and maintained by the dictatorship of senior management. From a financial standpoint, Ebbers and Scott Sullivan, the CFO, allowed salaries and bonuses above budgeted allowances and mismanaged compensation guidelines. Furthermore, WorldCom struggled to maintain its year 2000, first quarter 42% E/R ratio amidst revenue and pricing pressure brought on by a deteriorating industry and increased...
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...investment in Internet and Internet-related technicial stock and enterprises. The name derives from the fact that many of them have the ".com" internet top level domain suffix built into their company name. (Remember why the dot. com companies tanked?) Modell's Sporting Goods is the nation's oldest, family-owned and operated, retailer of sporting goods, sporting attire, for men, women and children wear and brand name athletic footwear. Modells.com (e-Business) currently offers a large collection of products from top name brands in the sporting goods and clothing business and has prospered from its e-business. Modell's has taken full advantage of its e-business opportunity like most of the dot.com companies but survived the rise and fall of the boom. The electronic medium (Internet) has reduced or eliminated many costs associated with doing store front business. For example: investment in real estate and facilities are reduced, and certain administrative costs related to these stores have been eliminated. Moreover, the accomplishment of the electronic medium opens up many opportunities. Here are some advantages in which Modell's has undergone to conduct e-business which has made them profitable: "Promote Availability and Market Reach," Electronic media is available twenty-four hours a day, seven days a week from any location in the world with an Internet connection. "Build Buyer/Seller Relationships," Consumer are...
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...Individual Analyzing Internet Sources Week 2 What did you learn? I learned more than I expected from the Pearson student lab activities. In the first activity I knew most of the information presented, but in the second activity I learned quite a bit about researching a topic. I did not know that the URL .org is no longer limited to a non-profit or research organization; which makes it harder to use that as a reliable resource but it can still be useful. I learned it is important to look for non-bias opinions, information with publish dates are resourceful, research based, and the best domains to find good information on are .org, .gov, .mil, and .edu. Although just because the site has one of these domains it does not mean the resource is accurate or correct necessarily. What did you not learn? Well as I said in the previous paragraph in the first activity most of the information that was present I acquired before. The comparison between the library and the internet are basic knowledge to most people. The Library is based for research purposes, with trained staff to help you, but closes at certain times. The internet has multiple reasons for use, with no trained assistance, but it never closes. They each have great traits that can be used for study. I also knew it is not safe to purchase items online you must be careful when doing this. You need to do research and make sure the site is reliable. Some people think because a paper has a title and author that it is true but...
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...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...
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...Case Paper 4 Danielle Long Indiana Institute of Technology Enron, World Com, & Tyco Scandals Three of the biggest frauds in American history, were committed by the companies Enron, World Com and Tyco. All three CEO/CFO’ks of these companies’ indulged in malicious intend to create a better financial standing within the company and for themselves. All of them were ethically wrong, regardless of the details. These individuals violated many different ethical principles which lead them all to be charged with criminal offenses and jail time. Enron used an accounting method known as “mark to market.” With this practice, the price or value of a security was recorded on a daily basis to calculate the profits and losses. Using this method allowed Enron to count projected earnings from long-term energy contracts as current income. This was money that might not be collected for many years. It is a thought that this was used to inflate revenue numbers by manipulating projections for future revenue. Sherron Watkins, an Eron VP, wrote an anonymous letter suggesting that the CEO had left the company because of improprieties and other illegal actions. She questioned the accounting methods and specifically citied certain transactions. Once Enron’s stock began to fall below a certain point, the results started to show on the financial statements. Finally in November of 2001 Enron officials admitted to overstating company earnings and filed for bankruptcy. This resulted...
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...investment in Internet and Internet-related technicial stock and enterprises. The name derives from the fact that many of them have the ".com" internet top level domain suffix built into their company name. (Remember why the dot. com companies tanked?) Modell's Sporting Goods is the nation's oldest, family-owned and operated, retailer of sporting goods, sporting attire, for men, women and children wear and brand name athletic footwear. Modells.com (e-Business) currently offers a large collection of products from top name brands in the sporting goods and clothing business and has prospered from its e-business. Modell's has taken full advantage of its e-business opportunity like most of the dot.com companies but survived the rise and fall of the boom. The electronic medium (Internet) has reduced or eliminated many costs associated with doing store front business. For example: investment in real estate and facilities are reduced, and certain administrative costs related to these stores have been eliminated. Moreover, the accomplishment of the electronic medium opens up many opportunities. Here are some advantages in which Modell's has undergone to conduct e-business which has made them profitable: "Promote Availability and Market Reach," Electronic media is available twenty-four hours a day, seven days a week from any location in the world with an Internet connection. "Build Buyer/Seller Relationships," Consumer are able to...
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...The dot-com bubble that occured in the 1990's through the early 2000's was said to have left some major negative impressions on the world of the internet and our economy, but that is not necessarily true. Because of the dot-com bubble, there have been many great outcomes that often goes unnoticed before looking past all of the businesses and internet companies that went under when this bubble finally burst in the early 2000's. In fact, many say that the dot-com bubble and burst was actually a needed cause and effect that has shaped the internet into what it now is today. Many people believe that a lot of the websites that existed during the dot-com bubble would have had some sort of success if it wasn't for the network infrastructure at the time. The thing is, not many people didn't have access to broadband and the websites weren't getting the exposure and full potential that it could have received. This is especially true for some websites, such as Broadcast.com (Altucher Confidential, 2011). This very same thought occurred during the dot-com bubble and computer scientists and engineers realized that there was a very much needed improvement to the infrastructure of the internet. In order to correct this, many businesses in the tech industry began using tax money to lay high-speed fiber optic cables so that the internet would be more accessible in certain cities and states. This is probably one of the most beneficial things that came about from the dot-com bubble because...
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...Assignment On Conflict Management of A&S DOT COM: (story of conflict, consequences, management strategy and preventions) Prepared by: 1. RoselineAbedinRiya ID: 141-11-731 2. Mariam Binta Khalil ID: 141-11-752 3. BickramTalukder ID: 141-11-737 4. SiumSadik ID: 141-11-742 5. HosneAraShetu ID: 141-11-718 6. Abu Raihan ID: 141-11-741 Prepared for: Md Abu Jafar Lecturer & Coordinator BBA program (Uttara Campus) Daffodil International University Daffodil International University LETTER OF TRANSMITTAL August 11, 2015 Md Abu Jafar Lecturer & Coordinator BBA program (Uttara Campus) Daffodil International University Subject: Submission of Assignment. Dear Sir, With due respect, We would like to inform you that it is our pleasure and a great privilege to submit the assignment titled "Conflict Management of A&S DOT COM". This is a conceptual subject where we have tried our best to complete this assignment with our theoretical knowledge as well as analytical abilities. However, it is also true that we have some limitations in our abilities and knowledge for which. Therefore, we expect your kind consideration about the limitations of our study while assessing our assignment. Your kind advice will help us to improve our work ability. We sincerely hope that the assignment would meet your level of expectation. We would gladly clarify...
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...if I should sit Alfred Zingale and Matthias Arndt next to each other. It wasn’t that I was worried about conflicting views, actually it was quiet the contrary, and I didn’t want them to be able to double team the other guests. Finally I decided that just because they have essentially the same opinions, I wouldn’t separate them. In my mind they come as a unit because they had co-authored a book. The place cards had been set and I made up my mind that I would do no more rearranging. I bent over the table in my grey sleeveless dress and lit the deep red candles that were extending upward out of the floral arrangement. The guests would be arriving soon and I began to think over the whole situation. Each person has written a book about the dot com industry, how they can be successful as well as how to invest wisely in one. I was hoping to learn a lot of information so I could make a good decision on whether my company would benefit from being online. These thoughts drifted through my head until the doorbell rang. I opened the door to a short plump woman with reddish brown hair in her late 40’s was standing on my stoop. She wore a pale green dress suit, but looked quite attractive. She extended her arm, shook my hand and introduced herself as Anita Rosen. As the only woman who was attending the dinner party that night, it was a given who she was, but all the same she was quite pleasant. John Cassidy was next to arrive. He looked like the typical “guy next door” type. I bet he...
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...Bubble Fundamentals of E-Commerce Instructor: Scott Howell Student: Lisa Mercer May 27, 2012 Introduction Within the past decades of the internet first being established the lives of everyday Americans and the world have changed greatly. Businesses have changed and evolved greatly with the access to the internet, as many are able to purse dreams of starting a business and possibly making millions. The internet has opened the doors for many to communicate with each other, receive daily news, and to do shopping. The upcoming of possibilities through the internet also led to irrational decisions brought on by greed from investors that made way for the Dot Com Bubble. History of Internet A pioneer of the creation the internet was Tim Berners-Lee. Though the internet didn’t become wide spread until the early 1990s the making of the World Wide Web can be traced back into the 1980s. Berners-Lee tried to sell his creation to the company that he was working for in Switzerland, but they were slow to acknowledge his efforts.(Griffin, 2000) With that Berners-Lee turned to the internet community in 1991 making his World Wide Web browser and web server software available. (Griffin, 2000) Many enthusiasts began setting up their own web servers around the world. Many scientists were already using the internet to share information found it easier to post their information on the web and wait for a reply. With some government agencies having the responsibility to make their...
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