Accounting Fraud at WorldCom 1) What are the pressures that lead executives and managers to “cook the books?” After the rapid evolution of the telecommunication industry in the 1990s‚ WorldCom shifted its strategy to focus on building revenues and acquiring capacity sufficient to handle expected growth. Their biggest goal was to be the No. 1 stock on Wall Street rather than capturing the market share. As a result‚ their Expense-to-Revenue (E/R) Ratio was their measurement for their main objective
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WorldCom Scandal A summary of WorldCom fraud would include having to describe the greed that would eventually destroy one of the largest communications companies in the United States and world. A humble motel owner‚ Bernard Ebbers took a small long distance company in 1983 and turned it into one of the most successful businesses in the country. It was not so much the business operations that caused the company to grow but the aggressive acquisitions that made the company grow. In its day‚ CEO Bernard
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The WorldCom Fraud © 2003‚ 2005 by the AICPA This presentation is intended for use in higher education for instructional purposes only‚ and is not for application in practice. Permission is granted to classroom instructors to photocopy this document for classroom teaching purposes only. All other rights are reserved. Copyright © 2003‚ 2005 by the American Institute of Certified Public Accountants‚ Inc.‚ New York‚ New York. WorldCom’s Background • Awoke the sleeping giant by leading the telecom
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WorldCom Scandal Formerly known as WorldCom‚ now known as MCI‚ this U.S.-based telecommunications company was at one time the second-largest long distance phone company in the U.S. Today‚ it is perhaps best known for a massive accounting scandal that led to the company filing for bankruptcy protection in 2002. In 1998‚ the telecommunications industry began to slow down and WorldCom’s stock was declining. CEO Bernard Ebbers came under increasing pressure from banks to cover margin calls on
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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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A capital improvement Betty could implement is leasing out a portion of her land to existing or future Alpaca owners. If Betty does not have a mortgage on her property‚ leasing out a portion of her land would generate immediate income. For instance‚ let’s say Betty owns five acres of land and decides to lease out one acre for a rental rate of $1‚000.00 a month. This additional income would yield $12‚000 annually. Betty could use a portion of this money to reinvest into her business while receiving
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Enron and its Associates Used Questionable Accounting Practices Clearly‚ there have been cases where management knowingly deceived the auditors. Then there seem to be other instances where the accounting treatment envelope was pushed just a bit too far. In the case of Enron‚ David B. Duncan‚ the former Andersen partner in charge of the Enron audit who was the government’s chief witness in the trial against Arthur Andersen‚ stood behind the decisions that resulted in the widespread use of off-balance
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Introduction WorldCom‚ the telecommunications giant‚ once was the largest telecommunications company in the world‚ with more than $30 billion annual revenue‚ $104 billion in assets and more than 20 million customers. John Sidgmore (2002)‚ Ebbers’ successor after the scandal‚ said “WorldCom is a key component of our nation’s economy and communications infrastructure.” However‚ the giant collapsed in 2002. 1. The Main Issue: Earnings Management 1.1 Definition of Earnings Management A commonly acknowledged
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Starting and Naming a Business Betty Wilson‚ whom I view as being a mature and respectable Christian‚ is currently thinking of starting her own company. Betty expressed that she would like to open a Christian Coffee House in her present town of Belmont‚ NC. Although her husband‚ John is opened to making a contribution of capital to her business‚ he is not at all interested in taking part in the company’s operation or management. Betty is unsure at this point as to whether or not
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General Information: Betty Naomi Friedan was born on 4th February in 1921‚ at Peoria‚ Illinois‚ USA‚ and died on 4th February in 2006 (at age 85)‚ at Washington DC‚ USA. Her parents were Russian Jewish immigrants. She was an American writer‚ activist and feminist. She married Carl Friedan‚ in 1947. Carl and Friedan had three children In one of her books (“Life so far”)‚ she accused him of beating her. Betty Friedan was a leading figure in the women’s movement in the United States of America
Free United States Betty Friedan