WorldCom scandal was a major accounting scandal that came to light in the summer of 2002 at WorldCom, the USA's second-largest long-distance telephone company at the time.
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21 Facts About WorldCom scandal
1.
2.
From 1999 to 2002, senior executives at WorldCom led by founder and CEO Bernard Ebbers orchestrated a scheme to inflate earnings in order to maintain WorldCom's stock price.
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3.
WorldCom scandal believed that things had been reined in somewhat after WorldCom took over, but he was still unnerved by vendors billing WorldCom for exorbitant amounts.
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4.
WorldCom scandal referred the auditors to corporate controller David Myers.
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5.
WorldCom scandal named the accounts of furniture, fixtures, and other, transmission equipment, and communications equipment.
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6.
WorldCom scandal eventually was able to locate one and took this information to Cooper.
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7.
WorldCom scandal told her that she was wasting her time and tying up employees, like Sethi, who are needed for other projects.
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8.
WorldCom scandal claimed those costs were being capitalized because the costs associated with line leases were fixed even as revenue dropped.
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9.
WorldCom scandal planned to take a restructuring charge in the second quarter of 2002, after which WorldCom would allocate these costs between restructuring charges and expenses.
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10.
WorldCom scandal asked Cooper to postpone the capital-expenditure audit until the third quarter, heightening Cooper's suspicions.
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11.
WorldCom scandal did discuss the matter with Sullivan, and assured Cooper that he would have support for those entries by the following Monday.
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12.
WorldCom scandal decided to ask the accountants who made those entries to provide support for them herself.
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13.
WorldCom scandal first asked Kenny Avery, who had been Andersen's lead partner on the WorldCom account before KPMG took over, if he knew about prepaid capacity.
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14.
WorldCom scandal had done so at the direction of Myers and general accounting director Buford Yates.
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15.
WorldCom scandal admitted that there was no support for the entries.
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16.
WorldCom scandal admitted that the entries should have never been made, but it was difficult to stop once they started.
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17.
Sullivan claimed that WorldCom scandal had invested in expanding the telecom network from 1999 onward, but the anticipated expansion in customer usage never occurred.
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18.
WorldCom scandal argued that the entries were justified on the basis of the matching principle, which allowed costs to be booked as expenses so they align with any future benefit accrued from an asset.
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19.
WorldCom scandal contended that since capital assets were worth less than what the books said they should be, he reiterated his proposal for a restructuring charge, or an "impairment charge, " as he called it, for the second quarter of 2002.
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20.
WorldCom scandal claimed that Myers could provide support for the entries.
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21.
Later that day, WorldCom scandal publicly admitted that it had overstated its income by over $3.
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