amounts that WorldCom paid other companies to be able to use their communication networks for their customers and it included access fees and transport charges for messages. The line costs are an expense and instead of reporting them as an expense at the time, they chose to hold off on paying them and adding them in as an expense so that it would look as though WorldCom was earning more than they really were. The first solution should have been to relook at the financial statements of WorldCom from an
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a- i) According to SCON 6 article 25, assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Assets has three characteristics: it embodies a probable future benefit that involves a capacity or in combination with other assets, to contribute directly or indirectly to future net cash inflows, a particular entity can obtain the benefit and control others’ access to it and the transaction or other event giving rise to the
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1. What are the pressures that lead executives and managers to “cook the books”? There were many pressures that lead managers at World Com to “cook the books”. They all stemmed for the need to reach their goal to be the No. 1 stock on Wall Street, even while the company wasn’t doing very well. Being No. 1 on Wall Street meant they focused on revenue growth which would increase their company’s market value. World Com started facing struggles as, “Industry conditions began to deteriorate in 2000
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the achievement of objectives in the following categories: 1. Effectiveness and efficiency of operations. 2. Reliability of financial reporting. 3. Compliance with applicable laws and regulations”. Obviously this was a huge failure on the part of WorldCom. There was no sense of ethical responsibility from either the CEO or the CFO. In reviewing the details of this case, it is clear that if Cynthia Cooper had been a person with a softer personality, who blindly followed orders and disregarded her
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Solutiongo to problem WorldCom scandal was one of the biggest accounting scandals of American corporate history. WorldCom was a U.S based telecommunication company. The WorldCom accounting scandal was disclosed in 2002. The Company had resorted to fraudulent accounting practices for five quarters (four quarters of 2001 and the first quarter of 2002) (The WorldCom Accounting Scandal, 2002). The well-known telecommunication company WorldCom and the accounting, auditing and consultancy enterprise were
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Assignment # 3 WorldCom Accounting Fraud The purpose of this paper is to discuss the aspects of the WorldCom accounting scandal and the effects that this scandal had on the accounting world as we know it. We will discuss the corporate culture at WorldCom and how it contributed to the accounting fraud, how the CEO’s desire to be the #1 stock on Wall Street contributed to the fraud, pressures on accountants to book and release accruals to meet expectations, pros and cons of whistleblowing
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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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Financial Reporting I Isgandar ALizada March 14, 2016 1. Conceptual Framework is a practical tool for describing objectives and concepts for general purpose in financial reporting. It has several functions. First, based on consistent concepts, assistance for the board to develop IFRS standards. Second, in absence of IFRS standards, helps to develop accounting policies. Moreover, help others to understand the standards. Providing complete, clear and updated set of concepts is its main objective
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The Enron and WorldCom Scandals Case: Enron 1. Which segment of its operations got Enron into difficulties? The segment of its operations that got Enron into trouble was Kopper and Dodson creating a series of limited partnerships and limited companies through which to operate their interests, but Kopper had no outside investor at risk. 3. Did Enron’s directors understand how profits were being made in this segment? Why or why not? I do not think Enron’s directors understood how profits were
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MANAGERIAL ACCOUNTING WORLDCOM How did it cook the books? Nguyen Bao Khanh Student ID: FB60162 Class: FB0662 May 19th, 2012 APENDIX 1. WorldCom’s accounting scandal 2. How did WORLDCOM cook its books? 3. Conclusion WORLDCOM headquarter in Virginia, USA. WORLDCOM’S ACCOUNTING SCANDAL WorldCom, established in 1983, whose CEO was Bernard Ebbers, was the second largest long distance phone company in the US after AT&T. It could be seen as a pride of America until it got into one
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