Worldcom Case Study

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An Ethical Dilemma at WorldCom:
A case study of Cynthia Cooper

The Scenario
One May afternoon, while sitting in his cubicle at WorldCom Inc. headquarters located in Clinton, Mississippi, Gene Morse was stunned to find an accounting entry for $500 million in expenses, which was not accounted for with any invoices. He immediately reported this entry to his boss, vice president of internal audit Cynthia Cooper (Pulliam & Solomon, 2002). Little did they know at the time that this discovery would begin a journey for Cooper and her team that would challenge their core values, ethical beliefs, moral principles, and strain their physical strengths and personal relationships. They would eventually unearth a $3.8 billion dollar fraud. Cooper was
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GAAP provides objective standards for judging and comparing financial data and its presentation, and limits the directors' freedom in showing an unrealistic picture through creative accounting. An auditor must certify that the provisions of GAAP have been followed in reporting an organization's financial data in order for it to be accepted by its stakeholders which include investors and lenders, as well as tax authorities (Stanwick & Stanwick, 2009). Cooper brought her problem to Arthur Anderson who refused their cooperation stating they only answered to her boss, Scott Sullivan. Sullivan also refused to cooperate and even went so far as to track her down on her personal time to warn her off the investigation. Pulliam and Solomon (2002, p.A1) write “as she pursued the trail of fraud, Ms. Cooper time and time again was obstructed by fellow employees, some of whom disapproved of WorldCom’s accounting methods but were unwilling to contradict their bosses or thwart the company’s goals.”
Cooper’s suspicions continued to grow and she became wary of the finance executives’ behaviors, “when I received an E-mail from the controller telling me that I was wasting my time auditing capital expenditures, it made me uncomfortable” (Katz & Homer, 2008, para.3). She began to rely more and more on her team. “Nobody wants to believe that the CFO is
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