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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Accounting Fraud at WorldCom LDDS began operations in 1984 offering services to local retail and commercial customers in the southern states. It was initially a loss making enterprise‚ and thus hired Bernie J. (Bernie) Ebbers to run things. It took him less than a year to make the company profitable. By the end of 1993‚ LDDS was the fourth largest long distance carrier in the United States. After a shareholder vote in May 1995‚ the company officially came to be known as WorldCom. WorldCom culture
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9-104-071 REV: SEPTEMBER 14‚ 2007 ROBERT S. KAPLAN DAVID KIRON Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather‚ there was a broad breakdown of the system of internal controls‚ corporate governance and individual responsibility‚ all of which worked together to create a culture in which few persons took responsibility until it was too late. — Richard Thornburgh‚ former U.S. attorney general1 On July 21‚ 2002
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SUBJECT: Forensic Accounting Introduction In this memorandum‚ I will explain the reasons as to why managers feel more pressure than in past years. Also‚ I will discuss several ways that managers can commit fraud for personal gain‚ and how these schemes are eventually caught by forensic accountants. Rising Pressure There has been a growing trend to hold managers accountable for their company’s performance. Wall Street analysts have become enemies of CEOs. These analysts set target quarterly
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Introduction By June 2002‚ it had become evident to the SEC that WorldCom had engaged in a significant corporate accounting fraud scheme which had overstated pretax income by about $7 billion since 1999. At the time‚ this was the largest deliberate misstatement in US corporate history. Although there are many interesting elements and players involved with this incident‚ for the purpose of this case study I will focus on the role played by Betty Vinson‚ the Director of Management Reporting and
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Running head: ACCOUNTING PRINCIPLES Generally Accepted Accounting Principles P G HCS 571 June 5‚ 2013 Generally Accepted Accounting Principles Generally accepted accounting principles (GAAP)‚ are standards and guidelines for financial accounting‚ and reporting‚ (Office of Financial Management‚ 2012). There are guidelines in effect for most organizations; GAAP ensures that the finances of an organization are correct. According to Cleverly‚ Song‚ and Cleverly (2011)‚ GAAP describes the “body
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The role of accounting is to allow business owners to make informative decisions. The main objectives of accounting are to maintain a record of business transactions‚ calculate profit and loss and depiction of financial position. Recording business transactions accurately is essential in accounting. If proper and complete records are kept‚ it will make it easier to find and correct any errors made. Different officials can also use records for different decision-making purposes. A balance sheet
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Accounting Principles The general rules and concepts that govern the Accounting filed are referred to as the Principles of Accounting. The Financial Accounting Standards Board (FASB) using the groundwork of principles and guidelines has formulated these rules. They lay the foundation for sound and ethical accounting practices. The GAAP (Generally accepted accounting principles or "GAAP") consists of three important sets of rules: • The underlying accounting principles • The rules and standards
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112: PRINCIPLES OF ACCOUNTING 1 ACCOUNTING THEORY NOTES (a) International Accounting Standards and International Financial Reporting Standards. The foreword to accounting standards defines Accounting Standards as Authoritative statements of how particular types of transaction and other events should be reflected in financial statements. Accounting Standards are developed to achieve comparability of financial information between and among different organizations. International Accounting Standards
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PRINCIPLES OF ACCOUNTING(POA)/ACCOUNTING FOR MANAGERS(AFM) Basic Accounting Concepts & Terminologies ACCOUNTING- DEFINITION Accounting means the various technical activities performed by accountants‚ including financial accounting‚ bookkeeping and management accounting. Accounting is considered to be as old as money. However in 1494 Lucas Fra Pacoili‚ an Italian Merchant is universally regarded as the father of modern system of accounting or double entry system of accounting. Accounting has
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