CASE TAKEAWAYS
? Illustrates pressures that lead executives and managers to "cook the books"
? Addresses the boundary between earnings smoothing or management and fraudulent reporting
? Demonstrates the role for internal control systems and internal audit to prevent or rapidly detect accounting fraud
? Brings to focus the expectations about governance processes performed by external auditors and the board of directors
? Demonstrates the pressure and consequences when middle managers follow orders that they know are wrong.
WORLDCOM
? WorldCom is a for profit organization that specialized in local, long distance and international plans, high cable internet, prepaid cards, and collect calling
? Provided telecommunications to customers nation wide with business corporations making up the majority of the 20 million customers they served.
? It began in the early 1980's and its main marketplace was domestic, however their products were available for global use.
GROWTH THROUGH ACQUSITION
? WorldCom achieved its position as a significant player in the telecommunications industry through the successful completion of 65 acquisitions.
? Between 1991 and 1997, WorldCom spent almost $60 billion in the acquisition of many of these companies and accumulated $41 billion in debt.
? Two of these acquisitions were particularly significant.
- The MFS Communications acquisition enabled WorldCom to obtain UUNet, a major supplier of Internet services to business
- MCI Communications gave WorldCom on ...