Accounting Fraud at WorldCom
1. Write a synopsis on accounting fraud at WorldCom.
2. Research and describe the external environment that WorldCom faced during 1999-2000.
3. Identify and describe all ethical dilemmas found at WorldCom.
4. Identify the stakeholders at WorldCom.
5. Briefly describe the culture within the company of WorldCom.
6. Describe the impact of the decisions made at WorldCom to the stakeholders.
7. Write a recommendation to the Board of Directors outlining corrective action for each ethical dilemma that you have identified in question 1, 2, 3, and 4. Be specific and thorough in your description of each dilemma (cite examples at WorldCom.)
8. How would the recommended corrective actions in question 6 impact the stakeholders?
9. Assuming you are the Chief Executive Officer at a Fortune 500 company what questions would you ask Cynthia Cooper in an interview for the Chief Financial Officer position? Would you hire her? Why or why not.
Synopsis of the Accounting Fraud at WorldCom:
WorldCom has been known as one of the largest telecommunications companies on the globe. On June 25, 2002, the corporation announced that it had overstated the earning levels in the previous financial year and the first quarter of 2002 by an amount of $3.8 billion. This had brought a noticeable effect on the financial market levels of the organization. This made the company to file for bankruptcy protection so as to safeguard the future operations of the company. In the same year the organization had an accounting maneuver that overstated an additional $3.8 billion. This made the United States securities to charge the company with claims of massive accounting fraudulent acts. The organization was restrained from destroying the financial documents. A case was filed against the corporation by the House Committee on the financial services of the company and several organization officials were indicted (Gray, 2005).
External Environment Faced By WorldCom in 1999-2000:
In the year 1999-2000, the external fundamental economy of WorldCom experienced economic problems as it supplied a vast population in the nation with the needed telecommunication capacity. Despite the high rates of internet growth, WorldCom alongside other telecommunication companies in the market faced a reduced level on demand. The revenues of the company fell as the financial development rates of the economy remained high. The stock market value of the company reduced making the corporate management of the organization to make irrational decisions that plunged the organization into its financial crisis. To maintain the company to be profitable in the midst of the problems, the accounting fraud was committed (WorldCom, n.d).
Ethical Dilemmas Found At WorldCom:
The management body of the organization committed the crimes such as; hiding bad debts, the understating of the costs and the backdating of the contracts made in the company. This was attested by the organizational employees who stated that the management body also took part in the accounting fraud in the organization. These allegations made the SEC to file a ...
The solution discusses business ethics at Worldcom accounting fraud.