Review of Accounting Ethics – Worldcom ACC557 Financial Accounting Cornelia H. Brown Strayer University Review of Accounting Ethics - Worldcom In a business world pressured to meet organizational objectives such as high revenue growth it is not alarming that conduct by decision makers may be deemed as questionable practices. These practices within the past two decades have resulted in a number of organizations finding themselves confronted with ethical dilemmas and the aftermath
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organizational structure generates strategies and the implementation of strategies (Hrebiniak‚ 2008‚ p. 1). Comparative Analysis of Leadership‚ Management and Organizational Structures During the period before WorldCom’s failure‚ Chief Executive Officer Bernie Ebbers and Chief Financial Officer Scott Sullivan had the reputation
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‘special’ duties/obligations that apply to particular individuals and employees who choose to engage in these activities in the organization leading to their downfall. The WorldCom case and scandal occurred because accountants as well as former CEO Bernie Ebbers and Scott Sullivan failed to live the virtues of accountancy as well as failed to adhere to the moral principles and ideals of their profession and further analysis reveals the ways in which these irregular accounting practices were carried out
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and the creditability of the accounting profession when corporate fraud is revealed. First‚ we must look at WorldCom as a business standpoint. The driving factor behind this fraud was the business strategy of WorldCom’s CEO‚ Bernie Ebbers. In the 1990s‚ Ebbers was clearly focused on achieving impressive growth through acquisitions. How was he going to pay for this acquisition binge? He paid for the acquisitions by using the stock of WorldCom. To accomplish this buying spree‚ the stock had
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[1] What business was WorldCom in? WorldCom was in the business of telecommunications. Where was WorldCom located? WorldCom was located in Clinton‚ Mississippi. Who was the CEO? The CEO was Bernie Ebbers. Who was the CFO? The CFO was Scott Sullivan. What are the names of the two members of the internal audit staff who worked with Cynthia on their secret investigation? Gene Morse and Glyn Smith What made the internal auditors think that possibly there was a need to investigate WorldCom’s
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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) with its largest in 1998‚ the acquiring of MCI for $37 billion. The acquisitions caused the company’s stock to increase and WorldCom used this
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because of antitrust regulation. • In 1999 revenue growth halted; stock price dropped • By 2001 owned a third of the US data cables • Was U.S.’ 2nd largest long-distance operator in 1998 and 2002 • Had over 20 million customers in 2002 CEO: BERNIE EBBERS CFO: SCOTT SULLIVAN Introduction of the case: • WorldCom‚ US second largest telecommunication company shocked the world by filing bankruptcy at 21 July2002. • The WorldCom filing surpassed Enron and became the largest bankruptcy filing in United
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important. If the whole society and the whole business world can have the good consciousness and ethical environment‚ the legislation may not so important. Q.4. In each case discussed at some length in this chapter – Enron‚ Arthur Andersen‚ WorldCom‚ and Bernie Madoff – the problems were known to whistle-blowers. Should those whistle-blowers each have made more effort to be heard? How? In each of the case‚ there are whistle-blowers. For example‚ Carl Bass was a whistle-blower to Arthur Andersen. After
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The 10 Worst Corporate Accounting Scandals of All Time If there is one theme to rival terrorism for defining the last decade-and-a-half‚ it would have to be corporate greed and malfeasance. Many of the biggest corporate accounting scandals in history happened during that time. Here’s a chronological look back at some of the worst examples. Waste Management Scandal (1998) Company: Houston-based publicly traded waste management company What happened: Reported $1.7 billion in fake earnings. Main players:
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Which segment of its operations got Enron into difficulties? The fall of Eron has understandably generated significant interest in the professional literature as well as in the popular press. The activities and events underlying Enron’s collapse are manifold‚ but several stand out as particularly noteworthy. One is the use of special purpose entities (SPEs). Although SPEs often serve legitimate economic purposes and are still in use today‚ Enron used several of them to hide debt and to overstate
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