Worldcom, A High Growth Company - 999 Words

When the accruals started to run out, WorldCom came up with another method, capitalization of line costs. WorldCom started classifying line cost expenses as long-term capital investments in 2000 (J. Randel Kuhn Sutton, 2006). These expenses are required to immediately recognize in the period incurred since the expenses are not for assets that can be capitalized and depreciated over their useful life in accordance with GAAP. By falsely recording these expenses, WorldCom reported an artificial increase in its net income and earnings before interest, taxes, depreciation and amortization (What Went Wrong at WorldCom?, 2002). Bernard Ebbers, CEO portrayed WorldCom as a high growth company. Even though, its market conditions had worsen, Ebbers told analysts that he â€Å"remain[ed] comfortable with . . . 13.5 to 15.5% revenue growth in 2000.† (Beresford, Katzenbach, C.B. Rogers, 2003). In order to show the public that they were doing well, top management kept a separate report to come up with the difference that existed between the actual and expected number that they need to report to the account called corporate unallocated revenue from the actual book (Beresford, Katzenbach, C.B. Rogers, 2003). By doing so, WorldCom improperly recorded a total of $958 million in revenue from 1999 to the first quarter of 2002 (Beresford, Katzenbach, C.B. Rogers, 2003).During an internal audit in 2002, it was discovered that WorldCom had committed fraudulent financial reporting. WorldComShow MoreRelatedA Short Note On The Type Of Business1023 Words   |  5 PagesType of Business WorldCom is a company that provides cheap local and long distance calling for customers. In the early 1990’s the company capitalized on fiber optic networks. It was able to provide basic phone services along with internet data services to large companies. As time went by they bought out other small business and by the time they merged with MCI, the company have become not only one of the largest telecommunications companies but the fastest growing company in a short period. HistoryRead MoreThe Performance Of A Good Corporate Image1548 Words   |  7 Pagesplays a critical role in the achievement of organizational growth and exhibit the best performance in the industry. Leadership determines the success of an organization as it is important to understand that the companies that perform excellently well in the industry are inspired by the conduct and attitude of their leaders. Leaders need to institute measures and mechanisms that will substantially improve the performance of their companies and project a good corporate image. It is important to acknowledgeRead MoreAccounting Fraud at Worldcom 21405 Words   |  6 PagesAccounting Fraud at WorldCom Vanessa Gail Woods Strayer University Connor-Green/ACC 576 March 21, 2010 Accounting Fraud at WorldCom The break up of ATT opened the long distance service market to small companies during the mid- to late-1980s and 1990s. Long Distance Discount Service (LDDS) opened in 1983 with moderate growth until its stock went public in 1989. CEO Bernie Ebbers decided to grow the organization through acquisitions (70 companies over the course of its lifetime)Read MoreBernard Ebbers Case Study1099 Words   |  5 Pagesnon-reversible. Had Ebbers been transparent of the performance of his operations at a stage the economics of his business were not sustainable, he probably would have had to declare bankruptcy years before we saw the end of WorldCom and in the business world, when the stakes are so high, once you have lost your reputation, you will most likely never be able to succeed again. The question to ask is that had Ebbers succeeded in acquiring Sprint and turned his situation around, perhaps the issues relatedRead MoreA Case Of Accounting Fraud1555 Words   |  7 PagesAnother major cas e of accounting fraud driven by the desire to build and protect one’s personal financial condition is the WorldCom debacle. Bernie Ebbers had to show continually growing net worth in order to avoid margin calls on his own WorldCom stock that he had pledged to secure loans. When WorldCom, the telecommunications giant, failed and was put into bankruptcy, the U.S. witnessed the largest accounting frauds in history. 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The quality of service willRead MoreWorldcom Failure1198 Words   |  5 PagesWorldCom Failure in relation to its Organizational Behavior LDR/531 - Organizational Leadership October 7, 2010 WorldCom Failure in relation to its Organizational Behavior INTRODUCTION Year 2002 saw an unprecedented number of corporate scandals: Enron, Tyco, Global Crossing, etc. In many ways, WorldCom is just another case of failed corporate governance, accounting abuses, and outright greed. Many people may question if there is a secret to operating a successful business in modern times.Read MoreLost insurance benefits as well as retirement benefits tied to WorldCom stock. Shareholders, which1200 Words   |  5 Pagesas well as retirement benefits tied to WorldCom stock. Shareholders, which included many pension funds, lost billions of dollars. The California public-employee’s retirement system, the largest state pension fund in the country, sued in an attempt to regain some of the $580 million it lost in the WorldCom debacle (Ripley 6). The telecommunications industry suffered as well. Industry companies were competing against WorldCom under false pretenses. WorldCom was fraudulently stating its financialsRead MoreWorldcom Fraud Essay1441 Words   |  6 PagesWorldcom Fraud TABLE OF CONTENTS WORLDCOM MISSION STATEMENT..........................................PG. 3 THE ETHICAL PRINCIPLES AND TENETS OF WORLDCOM ............PG. 4 THE BEHAVIOR OF WORLDCOM ADMINISTRATORS ....................PG. 5 WAS CYNTHIA COOPER A HERO?.............................................PG. 6 WHAT WORLDCOM DID NOT RECOGNIZE .................................PG. 7 THE CONCLUSION..................................................................PG. 8 WORKSRead MoreBiography Of Bernie Ebbers, The Founder Of Worldcom Essay1502 Words   |  7 PagesBernie Ebbers, the founder of WorldCom was highly ambitious and aggressive with an entrepreneurial nature. He demonstrated the transformational and charismatic leadership qualities that inspire people and cause them to be loyal followers. These people usually have singleness of purpose and are disciplined. Since most people have a desire to be led, Ebbers filled that need, coupled with the fact that he created tremendous wealth that many executives and employees benefited from. He was charming and