Financial Aspects Of The Accounting Scandal

Decent Essays
The case that I am focusing on is the accounting scandal by WorldCom in 2002. WorldCom was a telecom company that purchased many other firms and eventually bought MCI, currently owned by Verizon. In the years it was still operating as WorldCom, it had already taken over most of the Internet and data communications market, being known as the second largest long distance telecom company before it went bankrupt. With all this happening, the company would have to face two challenges if they were to be successful: one is the management of old and new organizations into one and the other challenge is the financial aspects of the new organizations (Moberg, 2003). During the company’s highest peak of success, it was considered one of Wall Street’s focuses. Through improper accounting practices, the company was able to favour themselves with new acquisitions as it allowed them to tinker within its financial aspects. The company decided to reduce reserve accounts from liabilities in order to add it to their revenue lines and got members to change operating expenses into long-term investments which in the end resulted in profits instead of losses. However, when WorldCom stocks started to decline the CEO at the time of this scandal, Bernie Ebbers, sought to pursue revenue growth and with an autocratic corporate culture persisting within the company, practices such as this were able to happen. An autocratic corporate culture would incorporate aspects such as centralized power in a
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