and those involved in it dearly. In the case of WorldCom, it was the internal audit department that uncovered one of the largest corporate financial scandals in history. On June 25, 2002, WorldCom, a telecommunications company headed by CEO Bernie Ebbers and CFO Scott Sullivan, admitted to improperly classifying more than $3.8 billion in line costs, or the costs to use other companies’ networks, in current expenses as capital expenditures. The understatement in expenses caused an increase to
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have a decent combination of backgrounds and independence, however, the board did not provide the proper oversight to manage the company or its personnel. The board was described as disinterested, dysfunctional and had no control over its CEO Bernie Ebbers. Breeden made suggestions to improve the board, such as recommending maximum term limits for directors, continued separation of the CEO and chairman, an improved meeting schedule reflecting a minimum of 8 meetings per year, two of which were offsite
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Addressing the Challenges of Groups and Teams University of Phoenix LDR/531 WHO8MBA07 Harold Van Alstyne December 16, 2008 Addressing the Challenges of Groups and Teams Turning a group into a team is one of the biggest challenges faced by most of the organization these days. Two or more people together form a group, but it does not form a team. A group becomes team when you treat them as high level. To turn group into a team there needs to be a set measurable goals, define desired
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The fraud committed at WorldCom is an enigma in itself; internal auditors had a great deal of struggles to overcome. The company was bogged down by inefficiencies, with subsidiaries all over the country and little cohesion. WorldCom was governed by a tyrant whose goal was growth that could not be maintained except through constant acquisitions, which were put to a stop to protect markets. The company had no written policies or corporate code of conduct, with different divisions following different
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Accounting Fraud at WorldCom 1) What are the pressures that lead executives and managers to “cook the books?” After the rapid evolution of the telecommunication industry in the 1990s, WorldCom shifted its strategy to focus on building revenues and acquiring capacity sufficient to handle expected growth. Their biggest goal was to be the No. 1 stock on Wall Street rather than capturing the market share. As a result, their Expense-to-Revenue (E/R) Ratio was their measurement for their main objective
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corporations making up the majority of the 20 million customers they served. LDDS began operations in 1984 offering services to local retail and commercial customers in the southern states. It was initially a loss making enterprise, and thus hired Bernie J. (Bernie) Ebbers to run things. It took him less than a year to make the company profitable. By the end of 1993, LDDS was the fourth largest long distance carrier in the United States. After a shareholder vote in May 1995, the company officially came to be
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9-104-071 REV: SEPTEMBER 14, 2007 ROBERT S. KAPLAN DAVID KIRON Accounting Fraud at WorldCom WorldCom could not have failed as a result of the actions of a limited number of individuals. Rather, there was a broad breakdown of the system of internal controls, corporate governance and individual responsibility, all of which worked together to create a culture in which few persons took responsibility until it was too late. — Richard Thornburgh, former U.S. attorney general1 On July
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Organizational Behavior within WorldCom WorldCom entered the telecommunications market as LDDS in 1983, founded by Bernie Ebbers in Jackson, Mississippi. The company grew dramatically through numerous acquisitions and adapted the name “WorldCom” in 1995. In 1998, WorldCom purchased MCI, the nation’s number two long-distance provider, for $37 billion. WorldCom, considered a major success story of the 1990s, filed Chapter 11 bankruptcy in July 2002. With 65 successful acquisitions, including 11
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Abe Hollenbeck Ethics Professor 9/29/2016 White Collar Crime Edwin Sutherland was a very well known person in the the 1930’s, he is known for having many different theories about criminology. However, one of his most well known events in his life was when he coined the term “white collar crime” in 1939. He defined white collar crime as "a crime committed by a person of respectability and high social status in the course of his occupation". Sutherland published four books while he was at Indiana
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unethical acts. They also include the communication of entity values and behavioral standards to personnel through policy statements, codes of conduct, and by example. In WorldCom, integrity and ethical values are absolutely abused. Specifically, Ebbers created a culture in which the legal function was less influential and less welcome than in a healthy corporate environment. He even did not include the company’s lawyers in his inner circle and appears to have dealt with them only when he felt it
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