Worldcom fraud essay
WorldCom, now known as MCI and acquired by Verizon Communication sincewas founded in to create a discount long-distance provider.
The four functions of management: planning, organizing, leading and controlling will be explained. He thinks that the company should focus on being the NO.
Telecommunications industry: an introduction. WorldCom is the largest accounting scandal in US history as of March One of the major issues that WorldCom had was have an overstatement of cash flow and profits for the year of and part of the year of When groupthink is present in a business environment, the characteristics result in a business environment that not only environment fraud, but also maintains it Scharff, , p. It was found in in Jackson, Mississippi. For example, share price of Nokia experienced five-percent decline, Sony Ericsson descended nine percent, and Vodafone descended 17 percent. WorldCom and The Mississippi Scheme Scandals words - 7 pages WorldCom began to fall in and in order to prevent the price from falling further WorldCom made mass loans to Ebbers to stop him from selling his stock. When employees in the Internal Audit department were asked about the process, some did not even know internal audits were going on. The community where WorldCom operated suffered massive losses. Strategic Finance, 95 7 , p. There is an economic recession and the bubble collapse which make the conditions deteriorate in Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late. Most employees claimed they feared they would lose their job if they ever pushed a concern too far with management.
If an investee is audited by a small auditing company that may not have the experience or resources to perform the audit, it could be a sign that the organization has hired an under-qualified auditor to have the fraud go undetected. Berkshire Hathaway should analyze the mentalities of a few individual workers at prospective investee companies for groupthink characteristics of becoming unwilling to speak up against the group or showing a high amount of loyalty to the organization.
Department of Justice disallowed the acquisition of Sprint After WorldCom Bankruptcy, stakeholders and investors had low confidence towards financial statement of corporations that caused the slow growth of stock markets.
Segregation of duties ensures that a single individual does not handle all parts of the accounting and disbursement system and decreasing the chance of fraudulent reporting taking place Wells, , p. First, WorldCom executives were large stockholders in the company and Sarbanes-Oxley limits the percentage of shares that executives are allowed to hold. WorldCom executives were doing everything they could to conceal the fraud and they were very clear regarding any consequences of prying. Bernard Ebbers took the reigns as CEO in and turned the company into a highly profitable one, at least on the outside. These factors continually impact the planning process performed at each level of management. In , the company that Bernard Ebbers grew from the ground up declared the largest bankruptcy in United States history. An unspoken rule among employees was to do what you were told without questions or risk the consequences. Companies can show a better image of their financial well being by providing misleading information None of the trademark holders are affiliated with this website. The Wall Street Journal. Conclusion The WorldCom accounting fraud case is one example of a type of fraud that can take place at a company and the effect that the fraud has on the organization, employees, and investors.
These procedures will create a powerful system to help protect Berkshire Hathaway from fraudulent organizations.
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