Incorrect accounting
1. Lack of controls that prevent and/or detect fraudulent behavior
2. Inability to judge quality of performance
3. Ignorance, apathy and incapacity
4. Lack of an audit trail
” Sullivan directed subordinates to book certain fraudulent adjustments and entries in WorldCom’s general ledger to mask WorldCom’s true performance. The fraudulent adjustments and entries were designed to falsely increase WorldCom’s reported revenue and to falsely decrease WorldCom’s reported expenses
Sullivan directed members of WorldCom’s General Accounting Department to reduce hundreds of millions of dollars in line cost expenses and increase capital asset accounts by the same amount through fraudulent adjustments and entries in WorldCom’s general ledger to mask WorldCom’s true performance. These entries were made after the close of the quarter and lacked any business justification or supporting documentation.
Sullivan explained to Ebbers that to meet Wall Street expectations the Company would have to engage in accounting practices for which there was no legitimate justification, and Ebbers replied to Sullivan, in words or in substance, “We have to hit our numbers.”
Scott Sullivan’s position of Chief Financial Officer at WorldCom, in conjunction with weak controls, presented opportunities for him to commit fraudulent activities.
Sullivan’s high position allowed him to dictate his power over his subordinates and often directed them to make large entries to the general ledgers. Sullivan established the precedent of incorrect sizeable sequence of accounting transactions which then presented the opportunity for the entry of fraudulent transaction.
The Internal Auditors were often given “special projects” in which were time-intensive, consuming up two six months of its commencement, being unable to perform. This allowed Sullivan to slip past and direct his subordinates to book certain fraudulent adjustments.
WorldCom had two sets of books, the true financial position and Wall
2. Inability to judge quality of performance
3. Ignorance, apathy and incapacity
4. Lack of an audit trail
” Sullivan directed subordinates to book certain fraudulent adjustments and entries in WorldCom’s general ledger to mask WorldCom’s true performance. The fraudulent adjustments and entries were designed to falsely increase WorldCom’s reported revenue and to falsely decrease WorldCom’s reported expenses
Sullivan directed members of WorldCom’s General Accounting Department to reduce hundreds of millions of dollars in line cost expenses and increase capital asset accounts by the same amount through fraudulent adjustments and entries in WorldCom’s general ledger to mask WorldCom’s true performance. These entries were made after the close of the quarter and lacked any business justification or supporting documentation.
Sullivan explained to Ebbers that to meet Wall Street expectations the Company would have to engage in accounting practices for which there was no legitimate justification, and Ebbers replied to Sullivan, in words or in substance, “We have to hit our numbers.”
Scott Sullivan’s position of Chief Financial Officer at WorldCom, in conjunction with weak controls, presented opportunities for him to commit fraudulent activities.
Sullivan’s high position allowed him to dictate his power over his subordinates and often directed them to make large entries to the general ledgers. Sullivan established the precedent of incorrect sizeable sequence of accounting transactions which then presented the opportunity for the entry of fraudulent transaction.
The Internal Auditors were often given “special projects” in which were time-intensive, consuming up two six months of its commencement, being unable to perform. This allowed Sullivan to slip past and direct his subordinates to book certain fraudulent adjustments.
WorldCom had two sets of books, the true financial position and Wall