Identifying and Describing the Ethical Issue
The ethical issue that Mr. Normand faced was producing fraudulent financial statements. Mr. Normand had to decide whether to trust his Chief Financial Officer, Scott Sullivan, and add a journal entry that would misrepresent the capital WorldCom owned. By misrepresenting the capital, WorldCom would be overstating their profit and lying to their shareholders. Mr. Normand had to decide whether he was going to do what was being asked of him or do what was right and not commit the fraud.

Mr. Normand testified that in the meeting held between him, other individuals in the corporate reporting department, David Myers, and Scott Sullivan, Mr. Sullivan continuously stated that he did not believe what he was asking them to do was wrong and if it were illegal he would take the blame for it. At that point, Mr. Normand should have recognized that what Mr. Sullivan was asking for was questionable.

The purpose of financial statements is to provide internal users and external users with relevant and reliable information. The lack of reliable information that was provided during the time period that they were altering journal entries, gave users unreliable information that prevented them from making informed decisions.

Explaining Alternative Courses of Action and Related Trade-Offs
In the case of Mr. Normand, I believe that he acted improperly. He seemed uncertain about the legality of what he did but he suspected that it was wrong. Mr. Normand would have been acting immorally if he had been compensated for agreeing to alter the numbers represented in the financial statements and had full knowledge that what they did was illegal. Since no information was brought forth concerning whether he had been compensated for his actions I believe he just acted improperly. However, I also believe that Mr. Normand should have known better than to agree to take part in the fraud, especially considering that he had a strong feeling that what they were doing was unethical.

If I had been in the place of Mr. Normand, I would have weighed out the alternative options and then made a choice depending on the trade-offs of those options. The first alternative that I feel Mr. Normand could have chosen was to have been a “whistle blower”. If he had decided to alert the authorities he may not have been in the position of facing possible jail time. Mr. Normand would most likely have been rewarded for coming forth, but he would have betrayed people that he may have considered friends.

The second possible option is if he had told Mr. Sullivan that he was going to resign. Mr. Sullivan asked him to, “not jump off the plane”, but by not doing so Mr. Normand faced possible jail time. Quitting his job would have ultimately left him unemployed. After WorldCom went down, because they would have eventually been caught for committing fraud, he may have also seemed unemployable considering his past affiliation with WorldCom.

The third choice would have been to tell Mr. Sullivan that he would not make the journal entries. The worst-case scenario would have been that Mr. Sullivan may have fired him but at least he would not be working for a company that was committing fraud. The best-case scenario would be that Mr. Sullivan would have realized that what they were doing was wrong and may have reconsidered what he was asking Mr. Normand to do.

If I were in Mr. Normand’s shoes I would have decided to go with being a “whistle blower” and alerting the authorities. If I had a feeling that what I was being asked to do was wrong I would seek out someone who had more experience in the subject and could tell me if what I was being asked to do was illegal. I would then report the company and to protect my identity I would ask that my identity be kept anonymous, so to avoid retribution from my superiors. In the end I would have exposed a fraudulent company and would have avoided jail time for making illegal journal entries.

Identifying Major Stakeholders and Explaining the Related Consequences to Major Stakeholders
The major stakeholders in this case are the stockholders of WorldCom, Mr. Sullivan, Mr. Myers, and Mr. Normand, and the general public. In any of the alternatives that I suggested in the previous section the stockholders of WorldCom would have been negatively affected because of the fraud committed. All stockholders would have lost faith in WorldCom and also the public would have lost faith in publicly traded corporations. If Mr. Normand had gone with the first alternative of being a “whistle blower” and alerting the authorities of the fraud that was being committed, he would have not have faced jail time and Mr. Sullivan, Mr. Myers, and all the other individuals committing the fraud would have been exposed. In that case if Mr. Normand had gone to the authorities when the idea of altering the numbers had first been brought up he could have prevented the entire scandal from occurring.

Mr. Normand could have also gone with the second alternative of resigning his position in the company. In this case the fraud would have still occurred but he would not have been associated with it. The other stakeholders being Mr. Sullivan and Mr. Myers would still be charged and so would any of the other individuals that took part in the fraud. Stockholders would still have lost faith in the company and would be more apprehensive in believing the information that was provided through financial statements.

In the third alternative Mr. Normand could have just opted out of agreeing to make the changes to the financial statements. In this case he may have still faced jail time if the other individuals had continued with the fraud. The fact that he had been aware of their intentions and had remained quiet would still make him an accessory to fraud. Mr. Myers and Mr. Sullivan along with all the other people involved would still be found guilty in this scenario. If Mr. Normand’s decision to not take part in the fraud had discouraged Mr. Sullivan from continuing with his plan and had realized the repercussions that his decision could lead to, then the scandal may have been avoided.

Scandals like the ones concerning WorldCom and other publicly traded companies are the reason why users of financial statements are apprehensive to believe the information provided to them. When the information given to them has been manipulated and is unreliable, users are not able to make well-informed decisions. The Sarbanes Oxley Act was the starting point in taking measures to avoid these types of occurrences. Companies are now held accountable to the reliability of the information they provide to their external users and the public is slowly starting to regain faith in publicly traded companies.