environment that is not healthy for anyone who is employed there. There are examples of companies where management engaged in illegal behavior and the end result was they hurt the company as well as all those who worked for the company. Enron and Worldcom executives ran their business into the ground by lying to their employees as well as those around them who thought the companies were doing very well. Enron was considered a very strong company. At one point‚ they were named America’s most innovative
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high-performance targets and grant large rewards for achieving these must have strong control systems to ensure that people are not tempted to cross boundaries. What are the four important control systems? Please identify each control by name. Strategy WorldCom never really had a strategic plan‚ committee‚ or framework. Their plan was rapid growth and maintaining that 42% E/R ratio. From the beginning it committed itself to high growth strategies that relied on aggressive corporate and fraudulent accounting
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was related to it. I will start off with a prologue of what the Sarbanes Oxley Act is‚ and later going in detail about the Act. Prologue The corporate scandals in the year 2001 of Enron and WorldCom‚ where Enron was able to produce fake reports of high profits with false accounting methods and WorldCom‚ who artificially reduced their expenses to falsely increase in the appearance of their revenues‚ created a market failure. Major stakeholders such as investors‚ government‚
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stock within NYSE has specialists to manage that specific stock‚ this feature is not incorporated in to the NASDAQ. The NYSE is not publicly traded while the NASDAQ is‚ allowing the public to trade stocks on it (NYSE And NASDAQ‚ n.d ) WorldCom Inc. The WorldCom Inc was a telecommunication corporation. Bernard Ebbers was the former Chief Executive of the corporation. He was ultimately found guilty of accounting crimes which lead to a huge scandal. He constructed the unification with MCI‚ which
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not release the accruals that had been established‚ so that they can be used during bad times of the company’s performance. This certainly violates the matching principle and destroys the purpose of periodic income statement. 3. I don’t think WorldCom had established an effective system of internal control over financial reporting related to the revenue recorded in its financial statement. According to PCAOB Standard No.5‚ effective internal controls are supposed to be in place for gaining confidence
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References: Bohlman‚ H. M. (2005). The Legal Ethical and International Environment of Business. Thomson South Western . Scharff‚ M. (2005). WorldCom: A Failure of Moral and Ethical Values. Journal of Applied Management and Entrepreneurship .
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very 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
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In the case of WorldCom‚ a national company that began in 1983 and would provide long-distance telephone services‚ it is hard to determine where the problem begins. The case‚ as explained in the book‚ has never really found the core of the problem. We are told that financial reports were falsely created and improper accounting practices were found‚ but who is to blame? The textbook tells us that several of the former top financial executives pleaded guilty to securities fraud‚ however they defended
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and employees of such powerhouse companies like Enron and WorldCom that went bankrupt without ever publicizing financial hard times. How could this ever happen? According to Horngren‚ Harrison Jr.‚ and Oliver (2010)‚ both Enron and WorldCom overstated profits‚ but WorldCom took it a step further by reporting expenses as assets (p. 380). Almost overnight‚ lives were ruined and the business community shaken; “the Enron and WorldCom accounting scandals rocked the United States” (Horngren‚ Harrison
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CASE 4: ACCOUNTING FRAUD AT WORLDCOM Betty Vinson: victim or villain? Should criminal fraud charges have been brought to her? How should employees react when ordered by their employer to do something they do not believe in or feel uncomfortable doing? In discussing whether Vinson should been charged with criminal fraud‚ it can be analyzed from ethical perspective which can truly judge whether she was morally responsible for the wrong or not. In order to determine whether Vinson was morally responsible
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