Description
Accounting Fraud - Who's to blame? A brief explaination of what went into The Worldcomm Scandal.
ETHICAL ISSUES
WORLDCOMM
A Presentation by:
Amitava Manna (11DCP007) Amritanshu Mehra (11DCP008) Ashwath Rao (11DCP015) Ravi Gupta (11DCP038)
What is Corporate Governance?
A generic term which describes the ways in which rights and responsibilities are shared between the various corporate participants (In the US, especially the management and the shareholders).
Corporate Fraud
Who’s to Blame????
Accounting Fraud
Profits = Revenue – Expenses
Accounting Frauds are committed by falsely inflating revenues or decreasing expenses.
WorldCom Background
Bernie Ebbers is the founder of Worldcom in 1984.
Telecommunications giant.
Provided: Internet Services, Long Distance and various other phone services for a cheaper price than competitors.
Largest in the U.S.
Held responsible for waking up it’s somewhat sluggish industry in the early 90’s.
THE SCANDAL – PRINCIPAL PLAYERS
THE GENERAL ACCOUNTING AND INTERNAL AUDIT DEPARTMENTS
CFO – SCOTT SULLIVAN
EXTERNAL AUDITOR – ARTHUR ANDERSEN
THE BOARD OF DIRECTORS
THE SCANDAL
THE SCANDAL
Failures of corporate governance in the WorldCom scandal
Every stakeholder group other than top management was very poorly served by the WorldCom Board of Directors.
Shareholders saw their shares become worthless.
Lenders were forced to take losses on their loans.
Employees lost jobs.
Impact
Impact
Impact
FROM BENCHMARK TO BANKRUPT
Impact – On People
Impact – On People
Post-Fraud Happenings
The WorldCom Scandal: A Chronology of Events
The WorldCom Scandal: A Chronology of Events
The WorldCom Scandal: A Chronology of Events
Key Takeaway
CONCLUSION
In a way this proves some of the negligence of the government. With so much financial fraud going on at the time in huge multi-billion dollar corporations, investors would have suspected a little better job at finding problems in the system. Accounting practices like these not only install distrust in financial institutions but also in government factions like the SEC that were created and funded for the sole purpose of preventing things like this from happening.
doc_610200400.pptx
Accounting Fraud - Who's to blame? A brief explaination of what went into The Worldcomm Scandal.
ETHICAL ISSUES
WORLDCOMM
A Presentation by:
Amitava Manna (11DCP007) Amritanshu Mehra (11DCP008) Ashwath Rao (11DCP015) Ravi Gupta (11DCP038)
What is Corporate Governance?
A generic term which describes the ways in which rights and responsibilities are shared between the various corporate participants (In the US, especially the management and the shareholders).
Corporate Fraud
Who’s to Blame????
Accounting Fraud
Profits = Revenue – Expenses
Accounting Frauds are committed by falsely inflating revenues or decreasing expenses.
WorldCom Background
Bernie Ebbers is the founder of Worldcom in 1984.
Telecommunications giant.
Provided: Internet Services, Long Distance and various other phone services for a cheaper price than competitors.
Largest in the U.S.
Held responsible for waking up it’s somewhat sluggish industry in the early 90’s.
THE SCANDAL – PRINCIPAL PLAYERS
THE GENERAL ACCOUNTING AND INTERNAL AUDIT DEPARTMENTS
CFO – SCOTT SULLIVAN
EXTERNAL AUDITOR – ARTHUR ANDERSEN
THE BOARD OF DIRECTORS
THE SCANDAL
THE SCANDAL
Failures of corporate governance in the WorldCom scandal
Every stakeholder group other than top management was very poorly served by the WorldCom Board of Directors.
Shareholders saw their shares become worthless.
Lenders were forced to take losses on their loans.
Employees lost jobs.
Impact
Impact
Impact
FROM BENCHMARK TO BANKRUPT
Impact – On People
Impact – On People
Post-Fraud Happenings
The WorldCom Scandal: A Chronology of Events
The WorldCom Scandal: A Chronology of Events
The WorldCom Scandal: A Chronology of Events
Key Takeaway
CONCLUSION
In a way this proves some of the negligence of the government. With so much financial fraud going on at the time in huge multi-billion dollar corporations, investors would have suspected a little better job at finding problems in the system. Accounting practices like these not only install distrust in financial institutions but also in government factions like the SEC that were created and funded for the sole purpose of preventing things like this from happening.
doc_610200400.pptx