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Worldcom Ethics Case

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er Ethics Case Study Assignment

1. Overview Of the Corporation:
• WorldCom is a company built on telecommunications in the United States. WorldCom was invented in 1963 and the MCI WorldCom was established in 1998. During the 1990’s, WorldCom was a fast growing company in terms of their telecommunication services. The company started to supply long distance calling in 1983 and was considered the fourth best phone providing business. It was very effective due to the quality and quantity of services they provided such as internet, data and other telecommunications. In 2002, WorldCom was able to achieve the second largest phone provider until a severe conflict appeared. The problem involved such accounting scandals which were unethical …show more content…

However, the operating expenses account on the balance was not subtracted by the revenue and was recorded to the capital account.
• The effect on the company was they went under bankruptcy. The company being at the second best position lost its rank and basically fell under a dark whole. They had to pay many debts such as paying $750 million dollars to the company called security and exchanges and also stocks to the MCI. They also had to refine $30 billion in debt, and were competing over this amount due to the high value. This affected investors because it had an impact on their money (they also went under loss). It took the people 3 years to find out about the accounting scandals of WorldCom. From 1999 to 2002 their unethical accounting actions were recorded and these eventually lead to many consequences. The company was able to hide their scandals by keeping their expenses concealed; increasing/raising their bank amount rates and displaying false profit values lead by the CEO’s.
3. Relate to GAAP’S:
• The accounting gaps that were affected were the matching principle and the revenue recognition principle. The expenses account on the income statement must match with the revenue account on the income statement. The company WorldCom did not display matching principle because the expenses they had a hold of were not recorded in the expense account. Instead, WorldCom recorded it in the capital account, which affects the revenue, the expenses, and the capital account of

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