SUBJECT: Accounting fraud at WorldCom Problem Statement WorldCom penetrated the largest accounting fraud in U.S history by overstating its tax income between 1999 and 2002. The main players in WorldCom’s accounting fraud included CFO Scott Sullivan‚ the General Accounting and Internal Audit departments‚ external auditor Arthur Andersen‚ and the board of directors. While individuals did have their own sins‚ employees cowardice and self-interested‚ the board passive and ineffective‚ external auditors
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Libor Scandal What is Libor and why does it matter? Libor stands for London Interbank Offered Rate. “It is considered to be an average interest rate which is estimated by some leading banks in London that they would be charged if borrowing from other banks.” Libor rate is considered to be the primary benchmark for short term interest rates around the world. It is the average cost of borrowing and is estimated on a daily basis by a group of banks as mentioned above. Libor rate gained momentum around
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behavior in business can be very easily become a disaster in wake of commonsense decisions gone wrong. This research paper is based on decisions being made in unethically manners that in the long run caused three of the largest corporate scandals of Enron‚ Tyco‚ and WorldCom. Before filing for bankruptcy in 2001‚ Enron Corporation was one of the largest integrated natural gas and electricity companies in the world. It marketed natural gas liquids worldwide and operated one of the largest natural gas transmission
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WORLDCOM‚ INC: CORPORATE BOND ISSUANCE 1. IS IT A GOOD TIME FOR WORLDCOM‚ INC. TO ISSUE? CONSIDER FACTORS IN FAVOR AND FACTORS THAT ARE NOT IN FAVOR. Personally I believe that the time is not in favor of WorldCom in undertaking one of the largest bond issues at the time. Even though there are many advantages with proceeding with the issue‚ I believe that the degree and the uncertainty raised by some of the disadvantages outweigh the advantages of going ahead with the $6Billion
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WorldCom Sunday‚ November 07‚ 2010 10:27 PM The following entries are hypothetical and intended to illustrate the initial recording‚ and subsequent ‘release’ and ‘capitalization’ of line costs. a. Prepare a journal entry to record $3‚500 million of estimated line costs for quarter 1. DR - Accrued Line cost $3‚500 CR - Cash and Cash Equivalents $3‚500 b. Assume that you find out in quarter 2 that the prior quarter’s estimate was too large by $100 million. Prepare the necessary journal entry
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SCANDALS IN 2000S Named scandals Named scandals in India Scandal Year reported Scope Location Key players Summary 2012 Indian coal mining controversy 2012 185‚591.34 crore (US$33.78 billion) nation Comptroller and Auditor General of India‚ the coal ministry‚ many electricity boards and private companies coal blocks allotted‚ not auctioned‚ leading to estimated losses as per the Comptroller and Auditor General of India [1][2][3] Karnataka Wakf Board Land Scam 2012 200‚000 crore
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Accounting Fraud at WorldCom Vanessa Gail Woods Strayer University Connor-Green/ACC 576 March 21‚ 2010 Accounting Fraud at WorldCom The break up of AT&T opened the long distance service market to small companies during the mid- to late-1980s and 1990s. Long Distance Discount Service (LDDS) opened in 1983 with moderate growth until its stock went public in 1989. CEO Bernie Ebbers decided to grow the organization through acquisitions (70 companies over the course of its lifetime)
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the executives employed at WorldCom. Before 2002‚ WorldCom was one of the top telecommunication businesses in its industry because of many acquisitions obtained by the company. Due to the increased popularity of the internet and the acquirement of UUNet and MCI Communications‚ WorldCom share significantly increased. According to Moberg and Romar (as cited in Browning‚ 1997) "By 1997‚ WorldCom’s stocks had risen from pennies per share to over $60 a share." WorldCom had become an attractive investment
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Case study on WorldCom THE WORLDCOM FRAUD:- Presented By: Pratik WorldCom’s Background • Awoke the sleeping giant by leading the telecom industry into profitability in the 90’s. • During the 1990’s‚ WorldCom was deeply involved in acquisitions and completed several “mega-deals” • Purchased over 60 firms in 2nd half of the 90’s • WorldCom moved into Internet and data traffic • Handled 50% of US Internet traffic • Handled 50% of e-mails worldwide WorldCom’s Background (cont.) • Purchased MCI for
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In 1998‚ Betty Vinson was promoted to a senior manager in the firm’s corporate accounting division. Two years later in her position she experienced a major ethical dilemma. The company WorldCom was a very successful company up until the middle of 2000 when the telecommunication industry entered a protracted slump. The company’s earnings were not Wall Street expectations‚ and it was saddled with unpaid bills. Vinson’s job was to repair the problem by doing some wrong accounting practices. The ethical
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