through the CRS Web WorldCom: The Accounting Scandal Bob Lyke Specialist in Social Legislation Domestic Social Policy Division Mark Jickling Specialist in Public Finance Government and Finance Division Summary On June 25, 2002, WorldCom, the Nation’s second largest long distance telecommunications company, announced that it had overstated earnings in 2001 and the first quarter of 2002 by more than $3.8 billion. The announcement stunned financial analysts and, coming on top of accounting problems
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company that had reinvented itself as a high-tech clearinghouse in an ever-expanding roster of markets. Enron's push to force utilities into the Internet age with its online trading systems, at a seemingly handsome profit, became an epic tale of the dot-com revolution.” This was the time when Enron was still standing at the top of the industry but then as they say, the world is going round and round, sometimes there are ups and sometimes there are down. So it now appears that Enron's tale may be more
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Research Study INTRODUCTION Accounting scandals in business firms arise with the disclosure of financial misdeeds by trusted executives of corporations. Examples of Accounting Fraud: • Merging short and long term debt into one amount to improve the perceived liquidity of the company • Failing to disclose risky investments or “creative” accounting practices • Over-recording sales revenue • Under-recording expenses (i.e. depreciation expense) Accounting fraud leads to many serious
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that flattened the world. He starts out with the fall of the Berlin wall and Windows 3.0 and ends with fast wireless Internet access and VOIP. The final coup de grace came with perfect political storm when the dot com bubble burst, 9/11 occurred, and the Enron scandal and follow on financial meltdown. The result was 3 billion more people in Russia, China, and India joining the flattened world. So now what? According to Friedman, we can’t behave in a business as usual way. We need harness our talents
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WorldCom history The history of WorldCom Company dates back in 1983 which started as a partnership between a former basketball coach Bernard Ebbers. This company was established at Mississippi as a coffee shop, which later developed to long distance Telephone Company. The company’s name initially was Long Distance Discount Service whose operations began on 1984. After several years in operation, the company became public in August 1989 with Bernard Ebbers as the company’s CEO (Moberg 4). Over the
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felt his chance of leveraging the internship into a full-time offer with Matthews was in serious jeopardy. THE CONSULTING INDUSTRY Since the burst of the dot-com bubble in 2000, many articles, in business magazines, had characterized the industrys decline and even forecasted its demise. With the consulting industrys role in scandals such as
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Assignment 4 One of the driving goals of entrepreneurs is to start up a company, and then take it public through an IPO (initial public offering). Is the prospect of realizing great gains by going public that feeds the venture capital frenzy. During the dot-com glory days, many companies with no revenues – indeed, with prospect of revenues in the foreseeable future – went public and consequently made their investors very rich. The Washington Post article provided below offers a story of a company that has
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Business Ethics Reform There have been many, increasingly significant business scandals and failures over the past forty years. There were the bribery scandals of the 1970s, the defense industry scandals of the 1980s, and the Savings & Loan scandals of the 1908s and 1990s. After that came the dot-com collapse, the accounting scandals involving Enron and WorldCom, and most recently the financial scandals and crisis of 2006-2009, whose effects have been the most damaging, and significant
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in which several large companies engaged in fraudulent behavior which eroded investor confidence in the stock market and to some extent destabilized the economy. Audits, which were conducted to assess the validity and reliability of a company’s financial statements, were not detecting the material misstatements in the statements. As a result, both the US Government and the accounting profession needed to come up with a way to prevent these immense frauds from occurring in the future. As a response
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Introduction WorldCom is a telecommunications company which was lead by CEO, Bernard Ebbers and CFO, Scott Sullivan. In 1999, WorldCom was not melting Wall Street’s revenue and earnings expectations, and it appeared that the coming year would produce more bad news. The CFO argued for setting realistic targets. However the CEO insisted that the company needed double digit growth, and pushed for aggressive targets. These aggressive targets were not supported by historical data or strategic assessments
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