Analyzing The Fraudulent Activities Of Worldcom

3290 Words Nov 20th, 2014 14 Pages
Abstract
This study indicates the importance of audit’s fraudulent activities according to a failed company. In this paper an attempt is made to analyze the fraudulent activities reasons and fraud performance of WorldCom. Also analysis the accounting and audit environment in WorldCom. WorldCom was the second largest long distance telecommunications corporation in America. Although the corporate structure was consistent with “best governance practice” and some governance indicators were even higher than the industry average requirements, the WorldCom’s failure proves that their corporate governance was just in format and not in action, especially in audit respective. The CEO, management and board members did not fulfill their responsibilities and this lead to weak internal control directly and a big accounting fraud. The reveal of this fraud scandal contributes to the bankruptcy of WorldCom in 2002. Most significantly, from this failed company, I learn audit plays a determining factor in development of a company.
Background of WorldCom
In 1983, Murray Waldron and William Rector set up Long Distance Discount Service that was WorldCom’ initial name. After developing rapidly in the next 15 years, WorldCom had become American second largest long distance Telecommunications Corporation. (Patra, 2010, p172) Its foreign markets were more than 21 countries throughout Europe, North and South America, and the Asia-Pacific region. This company expanded the business scale through a lot…
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