Worldcom Essay

need reviewing during an audit. WorldCom needs to establish relations with a reputable auditing firm and to hire an executive team who understands the important of workplace ethics. WorldCom management needs to communicate their expectations to employees and introduce fraud awareness training. Fraud awarness training includes an ethics hotline that employees can call into when an incident occurs. One of WorldCom’s weaknesses is its segregation of duties. WorldCom needs to establish an effective segregation

As long-distance rates and revenue declined, the debt and expenses piled up and put pressure on WorldCom’s ability to meet key-performance indicators and earnings forecasts (J. Randel Kuhn & Sutton, 2006). The line cost was the biggest expense for WorldCom and half of its total expenses. Management committed to achieve a low line cost to revenue ratio because lower ratio meant better performance and higher ratio meant poorer performance. Management focused on lowering the line cost level expense (J

order to increase their revenue, WorldCom moved $2.8 billion into the revenue line of its financial statements. However this was not enough to meet the earnings that WorldCom wanted. So they classify operating expenses as long term capital investments to hide these expenses in such way to give them another $3.85 billion. These newly classified assets were expenses that WorldCom paid to rent other companies phone network lines to utilize their networks. Furthermore WorldCom also added a journal entry for

THE ACCOUNTING FRAUD @ WORLDCOM: THE CAUSES, THE CHARACTERISTICS, THE CONSEQUENCES, AND THE LESSONS LEARNED by JAVIRIYAH ASHRAF A Thesis submitted in partial fulfillment of the requirements for Honors in the Major Program in Accounting in the College of Business Administration and in The Burnett Honors College at the University of Central Florida Orlando, Florida Spring Term 2011 Thesis Chair: Dr. Pamela Roush Abstract The economic prosperity of the late 1990s was characterized

executives and managers of WorldCom to "cook the books." Acquisition of other companies drove WorldCom to spend beyond their means; managers were told to spend whatever was necessary to increase revenue, even if it meant that long-term costs would outweigh the short-term gains. This fiscally unhealthy mentality led to a very bad decision to enter into long-term fixed rate leases for network capacity with extensive punitive termination provisions. Once the market for WorldCom 's services started to cool

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

The merger’s denial ultimately leads to WorldCom’s downfall (Eichenwald 2002). Behaviors During the decline of the company’s bottom-line, WorldCom upper-level management feel the financial pressure to provide favorable results to the shareholders. In addition, WorldCom’s acquisition of Sprint is temporarily halted. Two of WorldCom’s mid-level managers, Troy Normand and Betty Vinson rectify

Another major case of accounting fraud driven by the desire to build and protect one’s personal financial condition is the WorldCom debacle. Bernie Ebbers had to show continually growing net worth in order to avoid margin calls on his own WorldCom stock that he had pledged to secure loans. When WorldCom, the telecommunications giant, failed and was put into bankruptcy, the U.S. witnessed the largest accounting frauds in history. Former CEO, Bernie Ebbers, was convicted of orchestrating this accounting

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

Bernard John Ebbers is the former CEO of WorldCom. WorldCom committed into fraud and conspiracy because he did false financial reporting and eventually cause loss to investors and the amount of loss is USD 100 billion which is a huge amount. Bernard John Ebbers had to distribute more than USD 6.13 million to more than 830000 individuals and institutions who held WorldCom’s stocks and bonds. Bernard John Ebbers agreed to give up a portion of his assets which included his home, his interests in a lumber