WorldCom: The Scandal that Shocked the Nation By: Eric Dixon FSAAC_624_OL2 November 23, 2011 Professor Stephen Oliner Table of Contents Executive Summary…………………………………………………………Page 2 Corporate Environment……………………………………………………...Page 4 Types of Fraud Committed.…………………………………………………Page 5 Board of Directors Responsibility…………………………………………...Page 6 Internal Auditors Responsibility…………………………………………….Page 7 Conflicts of Interest………………………………………………………….Page 7 Collusion……………………………………………………………………
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Use the Fraud Triangle and Fraud Scale to critically analyse the actions of Bernie Ebbers and Scott Sullivan during the WorldCom saga/ What does your analysis suggest? Dennis Greer’s fraud triangle is a key framework in analysing the ‘factors that cause someone to commit occupational fraud’ (ACFE-The Fraud Triangle, Association of Certified Fraud, Examiners Available from:http://www.acfe.com/fraud-triangle.aspx [January 2014]). The three elements that make up the model are perceived
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Scandal and Fraud in the Business World Diana Christina Lopez The University of Houston-Victoria Abstract These papers explore the scandal and fraud of two multibillion dollar companies who file for the largest bankruptcy in business history. In the case of both Enron and WorldCom, the causes of fraud surrounded the manipulation and misleading financial reports created by accountants. Enron was accused of lying about its profits and committing a range of inappropriate deals, including hiding
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Answer no 1 (a): How senior managers at WorldCom managed earnings: Senior manager of WorldCom (CFO, Scott Sullivan) has cooked up the earnings of the company by violating the two basic rule of accounting i.e. accrual and capitalization. They overstate the company pre-tax income by releasing the accrual balance to the income statement and by capitalizing the operating expenses in the books (Dick Thornburgh, 2004). As per the GAAP (generally accepted accounting principles), a company should required
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WorldCon: A Case Study of WorldCom ACCT 424B Prof. R. Hayes May 12, 2011 WorldCom is a telecommunications company that was once worth billions but is now merged with Verizon after bankruptcy due to fraudulent activities. The question is what caused one of the largest US corporations began a spiral into financial ruin. WorldCom according to John Sidgmore, a former top executive of WorldCom, stated that WorldCom generated annual revenues of over $30 billion a year, has more than 60,000 employees
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WorldCom – A Business Failure Austin W. Anderson Organizational Leadership, LDR/531 12 May 2012 Alan Klingsieck WorldCom WorldCom was founded as the Long Distance Discount Services, LTD (LDDS) in 1983, and was based in Hattiesburg, Mississippi. In 1985, Bernard Ebbers was selected as its chief executive. The company went public in 1989 and merged with Advantage Companies, Inc. In 1985, the company’s name was changed to
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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
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WORLDCOM CASE ANALYSIS The WorldCom case is another example of large corporation failures where individuals in the firm failed to act in a morally correct way. Bernard Ebbers, the CEO and Scott Sullivan, the CFO, of the corporation should have been aware of the accounting processes being used in his firm (and undoubtedly he was aware) and should have taken steps to prevent others test for ethics. Authur Anderson also missed opportunities where he could have disclosed the fraud. Cynthia Cooper and
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LENGTH: 6613 words 1. Background On September 26, 2006, Bernard J. Ebbers ("Ebbers"), the former Chief Executive Officer of WorldCom, Inc. ("WorldCom"), reported to a federal prison in Oakdale, Louisiana, to begin serving his 25-year jail sentence from his conviction by a jury on nine counts of conspiracy, securities fraud and related crimes related to the bankruptcy of WorldCom in July 2002. Ebbers' appeals from his conviction and 25-year jail sentence were dismissed by the United States Court of Appeals
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1. Introduction WorldCom, the telecommunications giant, once was the largest telecommunications company in the world, with more than $30 billion annual revenue, $104 billion in assets and more than 20 million customers. John Sidgmore (2002), Ebbers’ successor after the scandal, said “WorldCom is a key component of our nation’s economy and communications infrastructure.” However, the giant collapsed in 2002. 2. The Main Issue: Earnings Management 3.1 Definition of Earnings Management
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