WorldCom Company Case Essay Sample
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- Category: company
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WorldCom Company Case Essay Sample
Fraudulent scandals have been a pertinent issue among corporate companies since in the past they were used to mismanage public funds. The example, of WorldCom Company left many investors shocked by the level of mismanagement of funds at the company. The aim of this paper is to critically analyze the etiology of the fraudulent activities of WorldCom Fraud.
How did WorldCom use or misuse data to support their decisions?
WorldCom Company’s management knew very well that the company did not have stern accounting standards to control or support any fraudulent activities (Cooper, 2008). The company’s management was sure of manipulating the finances of the company without being noticed because of existing loopholes in the auditing process. For instance, Bernard Ebbers, who was the CEO at the time, knew that he could ‘borrow’ money from the company freely for his selfish endeavors since he was the overall leader of the company and misrepresent company data to the tune of billions of dollars (Pavlo & Weinberg, 2007). An analysis of the fraudulent cases shows that WorldCom Company auditing system highly unreliable and lacked accountability perhaps because the Sarbanes-Oxley Act had not been created.
What were the results?
The results of manipulating loopholes in the company’s financial system led to the loss of billions of dollars within a short span of time. The management of the company could easily borrow money from the company and fail to pay back and there was also misappropriation of company expenditure. For example, the famous expenditure of $500 million on computers recorded as assets (Toffler & Reingold, 2004). Studies show that, the investors lost over $200 billion dollars due to company bankruptcy (Toffler & Reingold, 2004).
What are the limitations and significance of the data?
Misrepresenting the financial data of WorldCom Company was a sure way of ensuring that fraudulent activities were not discovered on time by auditors (Jeter, 2004). On the other hand, misappropriating data would ensure that investor’s confidence was not compromised so that they continued investing in the ‘profitable’ company.
What are ethical implications of data misuses in this case?
Data misuse in the case of WorldCom Company had various ethical implications. For instance the Company’s management in regard to the creator of the company Bernard Ebbers had violated public funds and confidence by paving way for corrupt deals to take place (Cooper, 2008). On the other hand, financial data was manipulated and misrepresented to show that the company was making profits while it was on the verge of bankruptcy. Helpless investors lost $200 billion of investments in the corruption ploy which is still being investigated up to date (Toffler & Reingold, 2004). Due to the above, the management had to resign and face incarceration for their illegal actions.
Cooper C (2008). Extraordinary Circumstances: The Journey of a Corporate Whistleblower. Wiley Publishers
Jeter L.W (2004). Disconnected: Deceit and Betrayal at WorldCom. Wiley Publishers.
Pavlo W. & Weinberg N. (2007). Stolen Without A Gun: Confessions from inside history’s biggest accounting fraud – the collapse of MCI Worldcom. Etika Books
Toffler B. L. & Reingold J. (2004). Final Accounting: Ambition, Greed and the Fall of Arthur Andersen. Broadway books