Accounting Fraud Scandal



Introduction1

About the Company1

About the Management2

Discussion & Financial Analysis2

Effect on Investors, Market & Corporate World4

Corporate Governance Failure4

The Case5

References7

Accounting Fraud Scandal

Introduction

This research paper is all about the frauds in the field of accounting. This paper will discuss the accounting frauds done in the corporate world by a certain company. The accounting methods that are used for making the accounting financial statements give an opportunity to corporate organizations to commit an accounting fraud. SEC (Security Exchange Commission) is the place where such frauds are handled. The aforementioned findings give a concise understanding audit of prevailing unprofessional conduct of bookkeeping expert who were answerable for every activity in outrages and indicate how bookkeepers move from watchdogs to planners of keen bargains and hoaxes as CFO's and CEO's and how organization administration fails on their responsibility to give reasonable and correct perspective of the business to the general public. The company that I have selected as a part of this research is WorldCom (Yallapragada et. al, 2012).

About the Company

The WorldCom story started from a coffee shop in the Hattiesburg, MS. Bernard Ebbers, a former basket ball coach came up with an idea of a long distance company on a table cloth while having coffee. The Company began to develop rapidly in an extremely short time of 15 years and became one of the biggest telecom suppliers of the United States. The association opened up to the world in August 1989 and he ended up being the wealthiest individual of the United States (www.worldcomnews.com). The organization shares of the WorldCom arrived at the top level of $ 64.51 yet after that supply of the organization began to fall as WorldCom could not buy Sprint in 2000 in light of the antitrust law however it succeeded to buy MCI in 1997 for $ 37 billion. In 2001 they claimed a third of the US information links and in 1998 and 2002 it was second biggest long distance operator in United States with over 20 million clients.

About the Management

WorldCom was a telecommunication association located in Clinton, MS. It had over 20 million clients, 80 thousand workers and thousands of customers. Throughout 1983, Murray Waldron and William Rector drafted a business arrangement offering long distance phone services (www.ecommercetimes.com). WorldCom was made in Hattiesburg, Mississippi by Bill Fields in 1984 under the name of Long Distance Discount Services (LDDS). Bernard Ebbers was designated as a CEO in 1985.

Discussion & Financial Analysis

Talking about the fraud that took place in the WorldCom company. The fraud started when the Scott Suvillan, CFO, Treasurer and Secretary of the WorldCom trained the accountants to record the false entries. Moreover, he likewise posted false entries himself and distorted speculators and others by indicating development. From 1998 WorldCom began to diminish reserve accounts which were expected to cover liabilities of companies acquired, WorldCom added $ 2.8 million to revenue from the aforementioned reserves (www.worldcomnews.com). They only brought in knowledge to one of division at Texas by simply sending an email demonstrating expenses which were improperly ...