preview

Financial Statement Fraud Schemes : Worldcom Essay

Decent Essays
Financial Statement Fraud Schemes WorldCom was involved in two major forms of financial statement fraud schemes, overstatement of revenue and understatement of line costs (Vance, 2016). WorldCom was overstating there revenue by regularly monitoring revenue through the sales groups’ performances measured against the revenue plan (Vance, 2016). Every two to three months a meeting was held that brought each sales channel’s manager and they were obligated to present and defend their sales channel’s performance compared to the budgeted performance (Vance, 2016). The major tool that measured and monitored the revenue performance at WorldCom was the monthly revenue report (MonRev) which was prepared and distributed by the revenue reporting and accounting group (Vance, 2016). The MonRev included detailing revenue data from all the company’s channels and segments but the full MonRev also contained the Corporate Unallocated schedule (Vance, 2016). The key players in this fraud scheme were WorldCom’s Chief Financial Officer (CFO) and Treasurer Scott Sullivan and senior vice president of financial operations, Ron Lomenzo. Sullivan had total control for the items booked on the Corporate Unallocated schedule (Vance, 2016). The Corporate Unallocated schedule amounts reported usually spiked during the quarter-ending months, and the largest spikes occurred in quarters when the operational revenue was farther away from meeting the quarterly revenue targets (Vance, 2016). WorldCom
Get Access