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The case study by Moberg and Romar (2003) points out WorldCom’s experience with fraudulent accounting to hide the true costs emerging in future quarters after an acquisition. WorldCom Corporation was known as the second largest telecommunications company in the world. It handled approximately 50 percent of Internet traffic in the United States and 50 percent of data communications worldwide (Obringer, n.d.). The growth strategy that was utilized by the corporation was the acquisition of other companies and mergers. Throughout the course of its operation, WorldCom successfully acquired a total of 65 companies while accumulating a debt of $41 billion. This approach did not have a long-term benefit to WorldCom since it became difficult for the company to integrate the new and old organizations to run smoothly as a single business (Moberg and Romar, 2003). The problem when acquiring or merging with a new company is how to continue the same level of customer service with a seamless transition of accounting practices.

In 2002, WorldCom filed for bankruptcy after an internal audit team discovered that accounting irregularities and unethical business practices has occurred in the company’s books. This occurrence has been pinned to the lack of ethical business conduct by the management body and its accounting personnel. The failure of corporate governance was the major cause of WorldCom’s financial disaster (Thornburgh, 2004).

The top management of the corporation had unethical business relations with some of the personnel in the corporation that led to the unethical behavior in WorldCom. This was evidenced by the practice of authorizing wealthy loans that were attached to low rates earnings. The CEO was charged a mere 2 percent interest on his loan, which is considered below the average for most borrowers (Moberg and Romar, 2003). Company funds were also

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