amounts that WorldCom paid other companies to be able to use their communication networks for their customers and it included access fees and transport charges for messages. The line costs are an expense and instead of reporting them as an expense at the time, they chose to hold off on paying them and adding them in as an expense so that it would look as though WorldCom was earning more than they really were. The first solution should have been to relook at the financial statements of WorldCom from an
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earnings management can be defined as using reasonable and legal means to achieve stable and optimised financing results (Burgstahler & Dichev 1997). It should be noticed the earnings management is legal activities rather than the illegal accounting fraud. Due to the availability of difference legal choices, the management can choose the most suitable choice which can generate more close earnings number to desired target. For example, the test on the intangibles impairment requires professional
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examination of the business failure of WorldCom Incorporated and also compare and contrast the leadership management and organizational structures and failures. Examining Business Failure 2 Introduction WorldCom was the second largest long distance provider and on July 19, 2002 filed the largest bankruptcy ever in U.S. history with its $41 billion dollar debt load, and more than $107 billion dollars in assets. In 1999 WorldCom’s profits began to decrease when WorldCom reduced budgets on telecom services
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RUNNING: Demise of Enron Corporation® and WorldCom® Demise of Enron Corporation® and WorldCom® Your Name October 31st, 2012 FIN/486 Instructor Enron Corporation and WorldCom In the last decade, two powerful American companies, Enron Corporation and WorldCom, have become the models of accounting corporate fraud. The Enron Corporation was founded in 1985 by Kenneth Law in Omaha, Nebraska. The company later moved its operation to Houston Texas when InterNorth and Houston Natural Gas merged
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opportunities for organizations to prevent fraud and improve ethical practices among employees. Training can help to educate, raise awareness, and increase short and long-term company profits. WorldCom was a classic example of failed corporate governance, accounting abuses, and plain greed that could have been prevented through appropriate management and employee training. This paper will provide an example of a training plan that could have helped prevent the demise of WorldCom. Developing a Training Plan
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Assignment on WorldCom Overview: WorldCom Inc. origins can be traced back to 1983 when it was formed with the breakup of AT&T and it enabled small, regional companies gain access to AT&T’s long-distance phone lines at deeply discounted rates. LLDS (Long Distance Discount Services) provided services to those regions where well-established companies, such as MCI and Sprint, had very little presence. At an early stage of the company, Bernard J. Ebbers, was given the charge to run the show
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Review of Accounting Ethics ACC557 Financial Accounting Ethics in Accounting and the Fall of WorldCom In 2002, WorldCom was the second largest telecommunications company in the United States, but because of management failures and an unethical accounting culture it went bankrupt. This paper contains a discussion describing corporate ethics currently used in business; WorldCom's background, and the ethical breach; how WorldCom's ethical issue was discovered, describing how management failed
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Justin Gardner ACCT 4456 Auditing WorldCom Case WorldCom Case Cynthia Cooper was the former Vice President of Internal Audit at WorldCom. Cynthia is widely known as the whistleblower that discovered the fraud that was occurring in 2002. The CFO at the time was having the corporate accounting team capitalize billions of dollars of network leases instead of expensing them as they should have. This let the company report a profit of $2.4 billion instead of a loss of $662 million. This all occurred
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WorldCom 1. a. Estimated Future Line Costs (L) XXX Line Cost Expense (E) XXX b. Line Cost Expense (E) XXX Estimated Future Line Costs (L) XXX Cash (A) XXX c. The fundamental
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B. WORLDCOM 2.0 Nature of the Fraud The nature of the fraud was the uses of fraudulent accounting method by add on huge earning in 2002 to cover the liability of acquired by company. When the earning is high, it will show that the company financial growth is high and will make the price of WorldCom's stock increase. The creative accounting was done by classified over $3.4 billion for line costs that is interconnection expenses with other telecommunication companies as capital expenditure. When
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