Why Do Big Companies Take So Much From Each Other?

1330 Words Oct 27th, 2015 6 Pages
Why 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
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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
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