Running head: CASE ANALYSIS OF THE ACCOUNTING FRAUD AT WORLDCOM Case Analysis of the Accounting Fraud at WorldCom Angela Crossley Troy University October 27‚ 2008 History The origin of WorldCom can be traced back to 1983. The CEO‚ Bernard J. Ebbers‚ of WorldCom had very interesting beginnings. He invested in Long Distance Discount Services (LLDS) with eight other investors‚ and believed that the telecommunications industry was a very good business venture. In the beginning
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board consists of twelve members‚ which divided to four executive members and eight independent non-executive members. Two out of four executive members are also the part of the family company founder‚ both hold a significant roles which are the CEO and CFO of Ignition’s parent company. The shares of the company‚ can be assumed divided into two main part. First‚ the majority shares are hold by the family member of Ignition’s founders‚ and this shares are followed by special voting rights. Second‚ the
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Management Accounting Research 19 (2008) 324–343 Operation of management control practices as a package—A case study on control system variety in a growth firm context Mikko Sandelin ∗ Helsinki School of Economics‚ Department of Accounting and Finance‚ P.O. Box 1210‚ FIN-00101 Helsinki‚ Finland Abstract This empirical case study examines the operation of management control practices as a package in a growth firm context by paying particular attention to the couplings among cultural‚ personnel
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The father and son are the CEO and CFO of the company. They are the only two family members on the board of directors. The other three board members are non-family members. TAM’s hired an independent accounting firm to help establish an ethics program. The accounting firm handles all the companies’ financials and independent audits. Although not required to be in regulation‚ the company requires a member of the board of directors‚ in addition to the CEO and CFO to certify the financial statements
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many products. In an effort to comply with SOX‚ Nano is in the process of establishing an in-house internal audit function‚ which previously had been outsourced. The company began this process by hiring a Director of Internal Audits. Nano Circuits’ CEO recently called a planning meeting to discuss the roles of key corporate participants regarding the implementation and maintenance of internal controls. Central to this decision is the organizational placement of the future internal audit function
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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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Spring 2009 Introduction Cadbury is a leading global confectionery company with an outstanding portfolio of chocolate‚ gum and candy brands. We employ around 45‚000 people and have direct operations in over 60 countries‚ selling our products in markets everywhere around the world. We are nearly 200 years young. Our origins can be traced back to 1824 when John Cadbury opened a shop in Birmingham‚ UK selling tea and cocoa and in 1831‚ started manufacturing drinking chocolate and cocoa. In 1969
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Congress passed the Sarbanes-Oxley Act‚ known in the industry as SOX‚ as a measure to improve transparency in financial accounting and to prevent fraud. SOX consists of 11 chapters‚ or titles‚ which establish wideranging new regulations for auditors‚ CEOs and CFOs‚ boards of directors‚ investment analysts‚ and investment banks. These regulations are designed to ensure that (a) companies that perform audits are sufficiently independent of the companies that they audit‚ (b) a key executive in each company
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total amount of error accumulated to a before tax amount of $8 million ($5.8 million after tax) with $3 million before tax ($2.2 million after tax) of the error directly related to the fiscal year that ended on June 30‚ 2004. Dianna Bullock (CFO) and Joe King (CEO) discussed the issue during an executive meeting in July of 2004 and decided to ignore the problem because they perceived it as immateriality. In the same month‚ the managers signed its representation letter for its 10-K reports without notifying
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3) Roots of the scandal The roots of the fraud and the role of internal auditors As explained above‚ the fraud was implemented by the former CEO Bernard Ebbers and commited by his financial director Scott D. Sullivan. The technique used by Worldcom was pretty simple; indeed‚ he cooked the books by saving pure operating expenses such as maintenance network in capital expenditure instead of expenses in order to hide its decreasing earnings and to maintain the price of Worldcom’s stock. In summary
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