emerging in future quarters after an acquisition. WorldCom Corporation was known as the second largest telecommunications company in the world. It handled approximately 50 percent of Internet traffic in the United States and 50 percent of data communications worldwide (Obringer, n.d.). The growth strategy that was utilized by the corporation was the acquisition of other companies and mergers. Throughout the course of its operation, WorldCom successfully acquired a total of 65 companies while
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Among the major scandals was Worldcom Company. Worldcom Company, at one point was the second largest telecommunication company, founded by Bernard Ebbers. The company merged with MCI in 1997 and eventually merged with Sprint. Bernard Ebbers remained as the company’s Chief Financial Officer after both mergers. Following the mergers, Bernard Ebbers received a large amount of capital and company stock making him a primary shareholder and CEO. As the MCI Worldcom stock declined, Bernard Ebbers
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king-sized jolt Tuesday as WorldCom revealed what could turn out to be one of the biggest accounting scandals in U.S. history. The telecommunications company said it had fired Chief Financial Officer Scott Sullivan, and accepted the resignation of senior vice president and controller David Myers, after an internal audit found improper accounting of more than $3.8 billion in expenses over five quarters. The misstated billions are also very bad news for ordinary WorldCom workers: 17,000 of them
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B. WORLDCOM 2.0 Nature of the Fraud The nature of the fraud was the uses of fraudulent accounting method by add on huge earning in 2002 to cover the liability of acquired by company. When the earning is high, it will show that the company financial growth is high and will make the price of WorldCom's stock increase. The creative accounting was done by classified over $3.4 billion for line costs that is interconnection expenses with other telecommunication companies as capital expenditure. When
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D.C. 20539 ) ) Plaintiff, ) ) v. ) ) WORLDCOM, INC., ) ) Defendant. ) ___________________________________________) Civil Action No. COMPLAINT (Securities Fraud) The Securities and Exchange Commission (“the Commission”) alleges for its Complaint as follows: 1. From at least the first quarter of 2001 through the first quarter of 2002, defendant WorldCom Inc. (“WorldCom”) defrauded investors. In a scheme directed and approved by its senior management, WorldCom disguised its true operating performance
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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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WorldCom WorldCom An internal auditor can be an invaluable asset to any company. They can help uncover anything from small errors in which there were no bad intentions to issues such as fraud that can end up costing the company and those involved in it dearly. In the case of WorldCom, it was the internal audit department that uncovered one of the largest corporate financial scandals in history. On June 25, 2002, WorldCom, a telecommunications company headed by CEO Bernie Ebbers and CFO Scott
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Accounting Fraud at WorldCom Problems • Determining what led to the demise and bankruptcy of WorldCom. Facts/Arguments • Corporate Culture o There is a lack of leadership and structure from management that is causing doubt and ambiguity among the company. o There is not a comfortable working environment that allows an employee to feel safe or secure with their thoughts or concerns. o Management was demeaning and condescending; often making threats and harsh remarks to employees.
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Based on my reading and research, I think the wrong business model of WorldCom is the key reason that caused this fraud. As a telecommunications company, providing service is supposing to be the main way for WorldCom to get their revenue. But they had a much better performance after they did the acquisition each time; because of they are not a very big company. They kept doing the acquisition because they found out that if they stop doing this, their performance will not be good enough for the
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Introduction On July 21, 2002, WorldCom, the second largest telecommunications company in the U.S applied for bankruptcy protection. The failure of WorldCom was due to the bad decisions of its executives to manipulate earnings with improper accounting entries. The key executives involved in this fraud were CEO Bernard Ebbers and CFO Scott Sullivan. Also, the accountants Bufford Yates, David Meyers and Troy Normand were all involved in this event. In this case, the accountant Troy Normand was
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