Shiqi Wang ACCT 4456 Professor Steve Jensen September 22, 2015 WorldCom Case Analysis According to the section 301.4 of Sarbanes-Oxley Act of 2002, each audit committee shall establish procedures for complaints regarding accounting, internal accounting control, and auditing matters, and the anonymous complaints regarding questionable accounting or auditing matters. However, in this case, the WorldCom Company did not have the procedures for anonymous complaints, so Cynthia Cooper decided to
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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
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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
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Corporate governance heavily refers to the whole structure of rights, processes and controls established internally and externally over the management of a business entity with the objective of protecting the interests of its stakeholders from any type of loses incurring. To begin with, firstly there are three types of auditors in the corporate governances, internal, external and government auditors. The role of the internal auditors in the corporate governance is to evaluates corporate activities
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Overview of Auditing Standards Ethical Standards Ethical Standards (FRS, 2010) is issued by Auditing Practices Board. Its responsibilities are set up standards and guidance for auditing work. According to this standard, APB tries to enhance confidence on auditing process for public. ESs includes five requirements that auditors must adhere to and its primary objective is to give ‘true and fair’ opinions on financial statement. The credibility of audit opinions depends on the integrity, objectivity
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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
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support. It was noted that this was not out of the ordinary at WorldCom. In your opinion, was this a proper accounting practice? Explain. Normally at the end of each month, Worldcom would estimate the costs of using “Off-net” facilities and connections. Worldcom would accrue these liability estimates. Line cost accrual estimates were very difficult to estimate with precision, especially for international services. When Worldcom learned more about the applicable charges of these Off-net services-when
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at WorldCom Date: 1/26/2015 3. What are the pressures that lead executives and managers to "cook the books"? The CEO and CFO of WorldCom wanted to “cook the books” because they wanted to keep the company’s stock price growing. Managers and accountants “cook the books” because they are forced to do so by their CEO and CFO. WolrldCom CEO Ebbers believed that increasing the stock price is their number one priority, so he set up a goal for the corporation--“The goal of WorldCom is to
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AVOIDING INVESTMENTS IN FRAUDULENT COMPANIES: THE WORLDCOM FRAUD Introduction The purpose of this report is to investigate and discuss the accounting fraud that occurred at WorldCom in order to recommend improved strategies to Berkshire Hathaway’s management for avoiding investments in companies with fraudulent financials. Accounting fraud is a crime committed by high level employees at an organization to manipulate the organization’s financial statements and intentionally disguise company
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Executive Summary In this case of accounting fraud at WorldCom, we have identified problems which had grew as the business scale of WorldCom (formerly known as LDDS) expanded, its direction of business started to drift away when its attempt to merge with Sprint was terminated by the U.S. Justice Department and the telecommunication industry started to deteriorate in 2000. The managers, particularly Bernard J. Ebbers and Scott Sullivan, struggled to maintain the company's main performance indicator
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