A Look Inside The WorldCom Scandal Essay - 945 Words

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. However, this fiasco could have been prevented if WorldCom had designed a system of checks and balances that would have†¦show more content†¦The CFO Scott Sullivan forced his henchman, David Myers to see to it that accruals were released from various business units including UUNET. When Myers ordered the accrual release from UUNET’s CFO, David Schneeman, he met resistance. Myers got angry with Schneeman and ultimately found another person to complete the accrual release in order to appease Sullivan, who worked for Ebbers (Kaplan Kiron, 2007). Bullying was another tactic of this company. Workplace bullies typically target independent employees who refuse to be subservient (Weidmer, 2011). For instance, when Cynthia Cooper, an internal auditor, was made aware of a questionable transfer, she brought it up at an audit committee meeting. After the meeting, Sullivan screamed at her and told her to stay away from that account (Kaplan Kiron, 2007). Additionally, victims of workplace bullying may experience various symptoms such as weight loss and difficulty sleeping (Namie, 2003). This is exactly what happened to accounting manager Betty Vinson. Sullivan bullied Vinson into releasing accruals. Vinson was eager to maintain her status and did as requested, more than once. Vinson began to lose weight and sleep due to the bullying she experienc ed and the guilt she carried (Kaplan Kiron, 2007). Preventative measures could have been instituted to avoid the WorldCom corporate fraud. First, WorldCom should have had an external Board of Governors comprised of businessmenShow MoreRelatedThe Sarbanes Oxley ( Sox ) Act Of 20021617 Words   |  7 Pagesthis area. Brief History of SOX Enactment The Sarbanes-Oxley Act of 2002 was created by Congress in response to financial scandals. There were several incidents which contributed to the need for legislature such as SOX. For purposes of brevity, the focus here will be on two of the largest financial scandals leading up to the passage of SOX, which are of those of Enron and WorldCom. In October 2001, Enron announced it was reducing after-tax net income by approximately $500 million shareholders’ equityRead MoreThe Sarbanes Oxley Act And Enron Essay1565 Words   |  7 Pageslaw in 2002 and it was ment to ensure that publicly traded companies complied with policies that made their financial records honest and not distorted to make them look better or to make them look worse. This was supposed to cut down on the corporate fraud with accounting. This all started because some companies such as, Enron and WorldCom. Enron was reporting inaccurate trading revenues by acting as a middle man in partnerships and selling back and forth these partnerships and crediting Enron for theRead MoreSarbanes Oxley Federal Law1073 Words   |  5 Pagesattractiveness of the United States for investors. The most notable cases of accounting malpractice include such scandals as Enron Corporation, Tyco International PLC, and WorldCom (Engel, Hayes, Wang, 2007). These companies we re extremely concentrated on increasing profit in an unfair way by providing investors with falsified financial statements. As a result of these public scandals, it was a need in new more strict regulatory standards in terms of protecting investors from fraud activities ofRead MoreThe Sarbanes Oxley Act ( Fraud )1075 Words   |  5 Pages Fraudulent activities and embezzlement are more prevalent in organizations than most people think. Because of the multitude of previous scandals, the Sarbanes-Oxley Act has required all publicly traded U.S. companies to have internal auditing and internal controls to check for fraudulent activity and embezzlement. While the Sarbanes-Oxley Act only applies to public businesses, the requirements of it should be applied to all types of businesses, even universities. In the Case of the City UniversityRead MoreWhat Is Statistic Ethical Practice?975 Words   |  4 Pagesconcerning expenses are provided and erroneous information concerning liabilities are reported. Manipulation of the financial market and inside trading can create an unethical environment. The topic that come to mind that demonstrates this type of behavior is the Enron/Andersen and WorldCom scandal. These company paints a vivid picture of what unethical statist look like. Enron was once the 5th largest company in world fortune 500. From 1999 to 2000 Enron stocks drastically increased from 56% toRead MoreGe ´S Ib: the Evo Project1400 Words   |  6 Pagesknew what to do and they did it really good. But fulfilling the expectations of his predecessor wasn’t the main problem for Immelt, he entered the company in a really complicated year, with 9/11 just few days after his mention and Enron and WorldCom scandals few months later and the recession this events caused, he had a big challenge in front of him, to generate growth in a company that big and to ignore the external situation in order to focus on your strategy to succeed. A big question oughtRead MoreWorldcom And Its Impact On Corporate World Essay4477 Words   |  18 PagesINTRODUCTION: WorldCom was U.S based Telecommunications Company. It was second greatest long partition phone association in U.S., which had been working together since 19th century. It was built up in 1968. It was the benchmark long partition telecom and web access. Today, it is perhaps best known for a bookkeeping embarrassment that stimulated the association shred for insolvency security in 2002. WorldCom overseers effectively exaggerated the association s bookkeeping numbers, enlargement theRead MoreAccounting Fraud And The Financial Fraud1761 Words   |  8 PagesIntroduction WorldCom CEO Bernard Ebbers, former partner said â€Å"He didn’t know anything about the long distance or telephone business, but he knew how to read numbers, he was a number cruncher.†(â€Å"Inside†) This should have been a warning sign to those investing in the company that Ebbers wasn’t the best choice to run the 2nd biggest telecom company in America. WorldCom was just one of many accounting frauds that took place in the early 2000’s. But unfortunately that trend of dishonest accounting didn’tRead MoreManagement Theories And Ethical Theories2085 Words   |  9 Pagesaccounting practices. Cooper battles with the Board on exposing the company and letting everyone know what is going. Bernie Ebbers is the CEO of the company; he has built up the company to be the super-giant it has become. David Myers is the controller of WorldCom that allowed these practices to go on and would be the nail on the coffin to help Cynthia Cooper close her case o n the accounting procedures that were used and how everything happened. Many other people had a role in exposing and operating this scamRead MoreThe Sarbanes Oxley Act Of 20022394 Words   |  10 Pagesbusinesses still functioning today.â€Æ' Introduction Most people remember the Enron scandal that surfaced in 2001 and took down the goliath company within months. The corruption and greed that surfaced in the months after Enron went into bankruptcy was astounding and has been studied over and over again as to how exactly it was allowed to happen. Enron, combined with the bankruptcy of other giants such as Tyco and WorldCom, all due to corporate corruption and greed lead to the creation of the Sarbanes-Oxley