AUDIT FAILURE OF WORLDCOM Group 1 Background • WorldCom‚ first named LDDS (Long Distance Discount Services)‚ grew largely by aggressively acquiring other telecommunications companies in 1990s. • For a time‚ it was the United State’s second largest long distance phone company (after AT&T). Background However‚ the year 2002 comes… • In March‚ the SEC began to investigate WorldCom as it reported large profit while AT&T reported loss. • In May‚ Arthur Anderson was replaced by KPMG
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Britain attempted to control through mercantilism and tried to increase tax on colonies‚ which resulted in the resistance from colonies. This eventually led to the outbreak of fighting to declare independence. The Britains believed in achieving a favorable balance of trade‚ they wanted the colonies to be prosperous because they wanted all of the exports to come straight to Britain and for the other colonies to receive a small portion of goods. Britain wanted to make as much money as possible out
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Case Study The Rise and Fall of WorldcomThis case study is about Bernard Ebbers CEO of Worldcom‚ Inc. and Scott Sullivan CFO of Worldcom‚ Inc. once they were boosted the company growth and they got awards. Later on they made frauds by using their influential tactics on employees and company’s board. Those are Assertiveness: it involves applying legitimate and coercive power to influence others by threatening or giving punishment. This tactic was used by sullivans office where they berated and intimidated
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Audit Theory Written Essay Assignment Does Opinion Shopping Impair Auditor Independence and Audit Quality? by: Tong Lu Journal of Accounting Research‚ Vol. 44‚ No.3 (Jun.‚ 2006)‚ pp.561-583 Additional articles: Ghosh‚ A.‚ Moon‚ D.‚ (2005). Auditor Tenure and Perceptions of Audit Quality. The Accounting Review‚ Vol. 80(2)‚ pp.585-612. Myers‚ J. N.‚ Myers‚ L. A.‚ Omer‚ T. C.‚ (2003). Exploring the Term of the Auditor-Client Relationship and the Quality of Earnings:
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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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by an auditor‚ where he is unable to obtain sufficient audit evidence. 2. Auditors of M/s Santa Banta (P) Ltd. were changed for the accounting year 2010-11. However there was no change in the position of closing stock which remained at ` 400 lacs . The auditors of the company propose to exclude the audit of closing stock of ` 400 lacs from their audit programme on the understanding that it pertains to the preceding year which was audited by another auditor. Comment. Basic Concepts in
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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
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CHAPTER AUDIT REPORTS THE AUDIT REPORT WAS TIMELY‚ BUT AT WHAT COST? 3 LEARNING OBJECTIVES After studying this chapter‚ you should be able to 3-1 Describe the parts of the standard unqualified audit report. Specify the conditions required to issue the standard unqualified audit report. Understand combined reporting on financial statements and internal control over financial reporting under Section 404 of the Sarbanes–Oxley Act. Describe the five circumstances when an unqualified report with an
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Question 1 At the time Cynthia Cooper discovered the accounting fraud‚ WorldCom did not have a whistle-blower hotline process in place. Instead‚ Cynthia took on significant risks when she stepped over Scott Sullivan’s head and notified the audit committee chairman of her findings. Discuss the key criteria for the operation of an effective corporate whistle-blower hotline. Be sure to highlight potential pitfalls that should be avoided and reference professional codes‚ legislation and academic
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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 was dominated
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