FAR600 CASE STUDY WORLDCOM QUESTION 1 a) Discuss the earnings management technique employed by the management of World Com. WorldCom admitted that the company had classified over $3.8 billion in payments for line costs as capital expenditures rather than current expenses. Line costs are what WorldCom pays other companies for using their communications networks; they consist principally of access fees and transport charges for messages for WorldCom customers. Reportedly‚ $3
Premium Dennis Kozlowski Tyco International
Information This report details the rise and collapse of WorldCom Group: this telecommunication giant employed 60‚000 individuals and had over $104 billion in assets. However‚ most numbers were deliberately misstated in order to maximize income and survive in the global stock market. WorldCom dates back to 1983 when in split up from AT&T to create a separate entity in order to take over the Southern states telecommunication markets. WorldCom focused on providing Long Distance Discount Services (LDDS)
Premium Balance sheet Income statement Revenue
How can managers promote innovation unwelcome surprises? Control in an Age oj by Robert Simons A fundamental problem facing managers in the 1990s is how to exercise adequate control in organizations that demand flexibility‚ innovation‚ and creativity. Competitive businesses with demanding and informed customers must rely on employee initiative to seek out opportunities and respond to customers’ needs. But pursuing some opportunities can expose businesses to excessive risk or invite behaviors
Premium Management Control system Control engineering
and the tactics and behaviors that would ultimately lead to the downfall and closure of the company. One of the most famous was Enron‚ but another well known failure was that of WorldCom. WorldCom was a big player in the telecommunications industry‚ being the largest telecom carrier of Internet traffic. In 2002‚ WorldCom joined the ranks of failed companies mostly because of the tactics that management and its accountants used to show that the company was earning more money than it was. This was
Premium Management Corporate governance Failure
Management Planning Paper Vernita M. Blacksher Introduction: We will be evaluating the planning function of the upper level management of the Company formerly called WorldCom. We will look at some of the actions taken by upper level management‚ their decision making and what actions were taken to achieve short-term goals. We will be analyzing the influence legal issues‚ corporate social responsibility‚ and ethics had on WorldCom’s management planning
Premium Management Balance sheet Corporate governance
The Accounting Scandal Enron Corp. Collapse and WorldCom Accounting Scandal 11/18/2020 The Enron Corp. collapse Formed in 1985 from a merger of Houston Natural Gas and Inter-north‚ Enron Corp. was the first nationwide natural gas pipeline network. Over time‚ the firm’s business focus shifted from the regulated transportation of natural gas to unregulated energy trading markets. The guiding principle seems to have been that there was more money to be made in buying and selling financial
Premium Enron Accounting scandals Finance
ENRON Enron shocked the world from being “America’s most innovative company” to America ’s biggest corporate bankruptcy at its time. At its peak‚ Enron was America ’s seventh largest corporation. Enron gave the illusion that it was a steady company with good revenue but that was not the case‚ a large part of Enron’s profits were made of paper. This was made possible by masterfully designed accounting and morally questionable acts by traders and executives. Deep debt and surfacing information about
Premium Enron
Ayusarita Satriani 311368 – IUP BUSINESS UGM Financial Management ENRON Resources: http://en.wikipedia.org/wiki/Enron_scandal ; http://news.bbc.co.uk/2/hi/business/1780075.stm; http://finance.laws.com/enron-scandal-summary Enron is an energy company that successfully grew from nowhere to be America’s seventh largest company‚ which has 21‚000 staff in more than 40 countries in 15 years. It was one of the world’s leading electricity‚ natural gas‚ communications‚ and pulp and paper companies
Premium Bernard Madoff Fraud Ponzi scheme
to act ethically. When an individual is asked to do something that they may even suspect would be detrimental to their livelihood‚ then they have all the rights given to them to not follow through with that action. In the case of Betty Vinson of WorldCom‚ while she had the clear understanding that her actions were wrong‚ she clearly kept personal financial safety ahead of her moral and ethical standards. This eventually translated into an even more detrimental result‚ which was jail time. She clearly
Premium Morality Ethics Jean Piaget
Behind Closed Doors at WorldCom: 2001 1. Two General Accounting employees—Dan Renfroe and Angela Walter—made journal entries in the amount of $150 million and $171 million‚ respectively‚ without detailed support. It was noted that this was not out of the ordinary at WorldCom. In your opinion‚ was this a proper accounting practice? Explain. Though this may not be out of the ordinary for WorldCom‚ this is not a correct accounting practice. The way the entries were made does not comply with the proper
Premium Auditing Financial audit Audit