Do Big Companies Take So Much From Each Other?

1328 Words Oct 25th, 2015 6 Pages
do big companies take so much from each other?
MCI, Inc. was an American telecommunication corporation, a subsidiary of Verizon Communications. In the article World-Class Scandal At WorldCom by David Hancock he discusses how “The corporation was formed as a result of the fusion of WorldCom and MCI Communications corporations, and used the name MCI WorldCom for a while and was succeeded by the WorldCom Company, before changing its name on April 12, 2003, as part of the corporation 's ending of their bankruptcy status.” WorldCom Inc. began as a small Mississippi telephone service provider of long distance telephones. They are not the only telecommunications firm in financial trouble, there are many others who have financial troubles also.
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Eventually he got caught and their auditing department uncovered $3.8 billion in fraud. They were faced penalties from all of this and the CFO was laid off, controller resigned, and the company filed for bankruptcy. Ebbers was sentenced to 25 years of fraud, from his horrible mistakes.

According to (accounting-degree.org) “Towards the end of 2003, it was estimated that the company 's total assets had been inflated by about $11 billion. This caused them to be the largest accounting fraud in history. Line costs are what they pay other companies for using their communications networks; they consist mainly of access fees and move charges for messages for WorldCom consumers.” Beginning modestly during the mid 90s and on at an accelerated pace through 2002, the company directed by Ebbers used fraudulent accounting methods to hide its droppings in earnings to maintain their stock. The fraud was accomplished in two ways booking "line costs” as capital expenditures on the balance sheet instead of expenses and "inflating revenues with weak accounting entries." In 2002, a small team of inner auditors at WorldCom labored at night and secretly, to disclose $3.8 billion worth of fraud. A few weeks later the company’s committee and board of directors were told of the fraud and acted very fast.

On July, 2002, WorldCom filed for chapter 11 bankruptcy protection in the biggest filing in the
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