Nobody downloaded yet

Accounting Fraud as a Key Component in WorldCom - Essay Example

Comments (0) Cite this document
Summary
The paper “Accounting Fraud as a Key Component in WorldCom” will look at WorldCom, the second biggest long-distance phone company, which is considered to have committed the greatest accounting fraud in the annals of history of U.S. In the late 1990 ’s, WorldCom is under pressure to maintain its EBITDA…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.9% of users find it useful
Accounting Fraud as a Key Component in WorldCom
Read TextPreview

Extract of sample "Accounting Fraud as a Key Component in WorldCom"

Download file to see previous pages Management failed to visualize and introduce efficient reporting and honest auditing and the investors and public were indeed lost billions of dollars due to their intentional fraud. (Zekany 101)
In telecommunication industry, line costs are reimbursed to local telephone companies for the connection and termination of long distance calls. This forms major single principal expense for long distance call service providing telecommunication company. WorldCom treated these revenue expenses namely lines cost as a capital expenditure against accepted accounting norms like GAAP. By treating these costs as capital expenditures, it would be depreciated over time and this would obviously result in increased current year earnings before EBIDTA.
The financial scandals in WorldCom necessitated a need for a law that will hold the CEO, CFO and CIO’s of companies answerable for noteworthy monetary transactions, a law that will reinstall investor confidence in Public companies, stop financial fraud and to introduce internal checks on financial transactions and monitor the conduct of public accounting.
After WorldCom accounting scandal, now, the Sarbanes-Oxley Act forbids directors, company officers or their authorized agents from “deceptively” coercing, manipulating, influencing, or misleading external auditors for the rationale of making company’s financial reports considerably deceptive. Now, under the Sarbanes-Oxley Act, management of a company has to report all transactions in an open manner, the CEOs and CFOs of companies endorse financial statements of their corporations, after initiating steps to make sure that sufficient internal control checks and processes at all levels are set forth. (Zekany 101)
WorldCom fraud reveals that management was exceptionally optimistic and assumed unusual risks including fraud.  ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Accounting Fraud as a Key Component in WorldCom Essay”, n.d.)
Accounting Fraud as a Key Component in WorldCom Essay. Retrieved from https://studentshare.org/law/1550816-participating-in-accounting-fraud-is-a-key-component-worldcom-a-multimillion-dollar-companies-collapse
(Accounting Fraud As a Key Component in WorldCom Essay)
Accounting Fraud As a Key Component in WorldCom Essay. https://studentshare.org/law/1550816-participating-in-accounting-fraud-is-a-key-component-worldcom-a-multimillion-dollar-companies-collapse.
“Accounting Fraud As a Key Component in WorldCom Essay”, n.d. https://studentshare.org/law/1550816-participating-in-accounting-fraud-is-a-key-component-worldcom-a-multimillion-dollar-companies-collapse.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Accounting Fraud as a Key Component in WorldCom

WORLDCOM ACCOUNTING FRAUD

...? WORLDCOM ACCOUNTING FRAUD WorldCom is a telecommunication giant in the US telecommunication industry. Faced with the slowdown in the telecommunication industry, WorldCom began to realize a decline in their stocks. This placed the company management under pressure to improve their financial performance in the highly competitive industry. WorldCom is a company that realized growth through evaluated mergers and acquisition that enabled it recorded immense growth and control in the telecommunication industry (Clikeman, 2009). After attaining a peak in the telecom boom, WorldCom Inc. was rated at $ 180 billion. Thereafter,...
9 Pages(2250 words)Essay

Accounting Fraud: Enron Accounting Scandal

...indicates the effect of the Enron, WorldCom, and other fraud-laden accounting scandals has reduced the public’s trust in the financial statements prepared by the companies listed in the stock exchange. In addition, the research shows that some external auditors are persons susceptible to temptation. The research shows that the liability of the Enron external auditor, Arthur Andersen, should not go unpunished. The Sarbanes –Oxley Act 2002 imposes stiff penalties to fraud-tainted corporation officers and external auditors. The research is divided into investigation, resolution, and prevention. Accounting fraud can be prevented. Cited Works...
12 Pages(3000 words)Term Paper

Accounting fraud

...? Accounting fraud Supervisor: June 29, Accounting fraud Introduction Academic research papers are organized tomeet professional standards and follow defined formats with distinct elements. Exploration of background information into a research, development of problem statement, research questions, research hypotheses, and methodology, and implementation of the methodology are some of the fundamental elements of an academic research paper. This paper identifies research problem and purpose in a research paper, aligns the problem and purpose to identify strengths and weaknesses of qualitative research methods and case study design, and justifies selection of qualitative methods and the case study design over other research methods... and...
5 Pages(1250 words)Research Paper

The Accounting Scandal at WorldCom

...from a forensic accounting perspective. The case study presents an analysis and discussion on the accounting frauds committed by WorldCom that led to its eventual bankruptcy and the criminal prosecution of key corporate executives. The research essentially begins with an examination of the growth of WorldCom over the years, and the industrial background and other factors that had caused the company to engage in fraudulent accounting practice. The case study shall then discuss the specific nature, and occurrence of financial statement fraud and examines how the fraud was discovered from...
30 Pages(7500 words)Essay

Xerox Accounting Fraud

...Running Head: XEROX ACCOUNTING FRAUD Xerox Accounting Fraud of the of the Xerox Accounting Fraud For fifteen years, from 1975 to 1992, Xerox Corporation's stock traded between about $5 and $14 per share. Looking at a long-term chart, one would think that it was a $10 a share stock. In late 1986, Paul Allaire became a director and in 1990, CEO. Like most CEOs of large companies, Allaire was well respected. He was a member of the Business Roundtable and Business Council and was on the board of directors of other companies including J.P. Morgan, Lucent Technologies, Sara Lee, Smith Kline, and Priceline.com. Xerox's stock continued to trade...
10 Pages(2500 words)Essay

Fraud detection in accounting

...Fraud." Houston Chronicle (2005 The Associated Press. "Delistings surge after Sarbanes-Oxley, study finds." Business News. December 13, 2004. The CPA Journal. "Beyond Sarbanes-Oxley compliance: five keys to creating value." Business and Management Practices. Vol. 74, No. 6, Pg. 11. June 2004. Donaldson, William H. "Impact of Sarbanes-Oxley Act." Capital Hill Hearing Testimony before the Committee on House Financial Services. April 21, 2005. The Economist. "Sarbanes-Oxley: A price worth paying" The Economist. May 19, 2005. The Economist. "WorldCom. Another cowboy bites the dust." July 27, 2002. Field, Alan M. "Adding tough new teeth; The Sarbanes-Oxley Act...
11 Pages(2750 words)Essay

WORLDCOM

...and legal notice is to give up the company by filing a bankruptcy. Ethical Responsibility Business ethics includes avoiding impossible promises and guarantees which are not achievable and accounting staff should reinforce the highest possible reporting and accounting standards and expectations.4 WorldCom is ethically responsible for suddenly filing of a bankruptcy last July 2002. The company should be held ethically responsible for intentionally overstating the company’s earnings up to nearly $10 billion. Speaking of business ethics, a company should always reflect a true financial statement. Any alteration on the accounting figures is considered as fraudulent and is...
5 Pages(1250 words)Essay

WorldCom

...controllers and master minds behind the success of WorldCom from the time it was Long Distance Discount Services (LDDS). The mention of this massive success is however overlapped in the case by the accusations of bringing down the company to bankruptcy as a result of massive accounting irregularities, fraud and conspiracy. Once the company started going under and an external auditing firm hired to come and audit it, the recommendations from this audit firm were not taken into action immediately by the auditing committee of the company. The case explains that if immediate actions had been taken to examine the massive accounting irregularities discovered by Cooper (an...
2 Pages(500 words)Essay

Worldcom

...Worldcom Case Primary Stakeholders and their Interests Worldcom is a telecommunication company that is based in Mississipi, was founded by Mr. Ebbers who had a goal of turning it into a multinational company. It was based on buy wholesale phone networks from AT&T and sell retail. His strategy was to grow the firm through acquisition. In 1997, WorldCom completed the largest merger in history at the time with MCI. Mr. Ebbers wanted to be the head of the top company on Wallstreet and in the telecommunications industry, his objectives therefore focused on financial gains mostly. One major problem however, was Ebbers’ incapability to maintain the businesses he was acquiring. He managed his...
1 Pages(250 words)Article

Accounting fraud

...Questions Enron Scandal was one of the biggest mishaps that took place in the industry of business. The case of Enron helped me understand the intricate delicacies that revolve around the sole aspect of business. Independent Audit forms an important component of the lessons that I have learned after going through the case in detail. A firm should always have an independent audit so that both the investors and the stakeholders are aware of the profit margins. It also helped me learn that customized entries can form a flawed system in view of the company. One should always be careful when all the details are being sought out so that these issues can be avoided. The aspect of Fair Value Accounting is being...
2 Pages(500 words)Coursework
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Accounting Fraud as a Key Component in WorldCom for FREE!

Contact Us