Preview
Preview

Essay on Worldcom Accounting Scandal

:: 2 Works Cited
Length: 1228 words (3.5 double-spaced pages)
Rating: Purple      
Open Document
Need writing help? Check your paper »



- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

It has been noticed that during the accounting scandal of WorldCom, journal entries in the amount of $150 million and $771 million, respectively, were made by two General Accounting employees – Dan Renfroe and Angela Walter—without detailed support. Although, this was not out of the ordinary at WorldCom, this is not a correct accounting practice as it is against the basic principles of bookkeeping and accounting. This is because detailed support in the form of documentation is the key element in providing support to a journal entry and explains the reason or purpose why the journal entry was created in the first place. Such support is very important and relevant from the point of view of the persons reviewing the journal entry and those intending to approve the journal entry. Most importantly, it is extremely relevant and essential from the point of view of external auditors of the company or business. Thus, such support or related documentation enables the reviewer or approver to assess and acknowledge the completeness, reasonableness, accuracy, and appropriateness of the journal entry.
2.
The company released $150 million in line cost accruals in the Wireless division over Deloris DiCicco’s objections, without any proper support for the entry. Since, there was no proper support, it is not clear whether the accruals were released with or without any analysis of whether the company had any excess accruals in its accounts. In other words, it is not clear if there was any proper basis in reducing line costs. Also, these accruals were not released in the period in which they were identified, but rather in the period in which these were considered needed by the management.
Further, these line costs were reduced by transferring $1...


... middle of paper ...


...ing only on operational audits and totally avoiding financial audits. On the pretext of cost-saving, it clearly avoided any and every function which could overlap with the role of the external auditors. It carried out various “special projects’ assigned to it by Mr. Sullivan; and such projects were purely operational in nature and had no audit purpose.



Works Cited

http://www.aicpa.org/Research/Standards/CodeofConduct/Pages/sec500.aspx
2.
http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175822892635&blobheader=application%2Fpdf
3.
http://www.ifrs.org/Home.htm
4.
http://fl1.findlaw.com/news.findlaw.com/wsj/docs/worldcom/bdspcomm60903rpt.pdf
Lynne, W. Jeter, (2003). Disconnected: Deceit and Betrayal at WorldCom.Wiley. 272 pages.
Swanson,D., (2010). Internal Auditing: Raising the Bar.IT Governance. 301 pages.


Click the button above to view the complete essay, speech, term paper, or research paper

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »







This essay is 100% guaranteed.


Title Length Color Rating  
Essay on Worldcom Accounting Scandal - It has been noticed that during the accounting scandal of WorldCom, journal entries in the amount of $150 million and $771 million, respectively, were made by two General Accounting employees – Dan Renfroe and Angela Walter—without detailed support. Although, this was not out of the ordinary at WorldCom, this is not a correct accounting practice as it is against the basic principles of bookkeeping and accounting. This is because detailed support in the form of documentation is the key element in providing support to a journal entry and explains the reason or purpose why the journal entry was created in the first place....   [tags: Worldcom Accounting Fraud]
:: 2 Works Cited
1228 words
(3.5 pages)
Strong Essays [preview]
Essay on The Case of WorldCom - Equal Pay for Equal Work Ethics has been around since the first humans could understand the concept of right and wrong. More specifically in accounting the most ethical decision doesn’t always produce the most outcomes for a company. For example, falsifying documents or information to improve the overall image of the company to the public. For this reason one can see why someone might be tempted to this type of unethical behavior. WorldCom can be the perfect example of what can go wrong when these types of behaviors are going on within a business....   [tags: business ethics, scandals]
:: 8 Works Cited
1172 words
(3.3 pages)
Strong Essays [preview]
WorldCom and The Mississippi Scheme Scandals Essay example - WorldCom and The Mississippi Scheme are both large financial scandals that have occurred. WorldCom was a telecommunication company that overstated their cash flow by reporting $7.6 billion in operating expenses as capital expenses. WorldCom is the largest accounting scandal in US history as of March 2002. The Mississippi Scheme was a business scheme that destroyed the economy of France during the 1700’s. The scheme involved the loss of paper money’s purchasing power as a result of asset inflation....   [tags: Finance Accounting Scandals Fraud White Collar Cri] 1703 words
(4.9 pages)
Powerful Essays [preview]
Essay on A Look Inside The WorldCom Scandal - WorldCom was the ultimate success story among telecommunications companies. Bernard Ebbers took the reigns as CEO in 1985 and turned the company into a highly profitable one, at least on the outside. In 2002, Ebbers resigned, WorldCom admitted fraud and the company declared bankruptcy (Noe, Hollenbeck, Gerhart, &Wright 2007). The company was at the heart of one of the biggest accounting frauds seen in the United States. The demise of this telecommunications monster can be accredited to many factors including their aggressive-defensive organizational culture based on power and the bullying tactics that they employed....   [tags: Business Fraud]
:: 11 Works Cited
958 words
(2.7 pages)
Better Essays [preview]
Remembering the Frauds at Enron and WorldCom Essay - "This is why the market keeps going down every day - investors don't know who to trust," said Brett Trueman, an accounting professor from the University of California-Berkeley's Haas School of Business. As these things come out, it just continues to build up"(CBS MarketWatch, Hancock). The memories of the Frauds at Enron and WorldCom still haunt many investors. There have been many accounting scandals in the United States history. The Enron and the WorldCom accounting fraud affected thousands of people and it caused many changes in the rules and regulation of the corporate world....   [tags: corporate financial scandals] 2739 words
(7.8 pages)
Powerful Essays [preview]
The Accounting Fraud At Worldcom Essay - From the time of WorldCom’s inception there always seemed to be a tradition in management as if the company was only 100 or so employees. There was a “good old boys” mentality among the limited few running the company and if you were outside that circle then were told only what they wanted you to hear. An unspoken rule among employees was to do what you were told without questions or risk the consequences. One example of this situation occurred when senior management member Gene Morse told an employee “If you show those damn numbers to the f****ing auditors, I’ll throw you out the window” (Kaplan, R.S., & Kiron, D., 2007, p....   [tags: Critical Thinking Essays]
:: 4 Works Cited
1350 words
(3.9 pages)
Strong Essays [preview]
Big Business with WorldCom, Microsoft and Yahoo Essay - The 1st of February of 2008 Yahoo. received an unsolicited $44.6 billion bid from Microsoft to, together, better tackle the industry and compete against Google. Microsoft offered a bid of $31 per share, which was higher than Yahoo!’s closing share price that same day. Yahoo. believed that Microsoft’s offer was “substantially undervaluing the brand, audience, investments, and growth prospects”. Yahoo. wanted $37 per share. YHOO’s closing price the day Microsoft placed the bid was $28.38. Soon the public was informed of the unsolicited bid and chances grew of Microsoft and Yahoo joining to become Google’s biggest competitor....   [tags: unsolicited, stock, scandal] 992 words
(2.8 pages)
Better Essays [preview]
Essay about Worldcom Fraud - Abstract On March 15, 2005 former CEO of WorldCom, Bernard Ebbers sat in a federal courtroom waiting for the verdict. As the former CEO of WorldCom, Ebbers was accused of being personally responsible for the financial destruction of the communications giant. An internal investigation had uncovered $11 billion dollars in fraudulent accounting practices. Later a second report in 2003 found that during Ebber’s 2001 tenure as CEO, the company had over-reported earnings and understated expenses by an astonishing $74.5 billion dollars (Martin, 2005, para 3)....   [tags: Business finance scandal]
:: 6 Works Cited
1356 words
(3.9 pages)
Strong Essays [preview]
Essay on Overview of Business Ethics - Business Ethics In today’s business world, organizations have an effect on many people especially in the working class of our society. They have an obligation to their employee, customers, society and the world to set a good sample of an ethical environment. It is their responsibility to conduct business in a way that is not harmful and which positively benefits as many people as possible and themselves. Although this sounds simple, and it is easier said than done, as there will always be a conflict of interest between various groups of people or organization....   [tags: Enron, WorldCom]
:: 3 Works Cited
659 words
(1.9 pages)
Better Essays [preview]
Essay on Enron And The Fall Of The Company - Enron and the fall of the company Enron was a company that was known by many people and corporation not only in the United States but also around the world. It grew to be one of the largest companies, so as imaged a lot of people were affected by the fall of the company. Over 210000 employees lost there jobs without even knowing what was coming to them and what was going on behind the doors by the people who were running the company. Apart from losing their job, their form of income for their families, they also lost any money that they had invested in shares of the company and their pension funds, because the company encouraged their employees to invest their money in its own shares and...   [tags: Corporate Scandal] 1928 words
(5.5 pages)
Strong Essays [preview]