This website uses cookies to ensure you have the best experience. Learn more

Wc Question 1 Essay

1563 words - 7 pages

1- What are the pressures that lead executives and managers to “cook the books?”
In the 1990s, the telecommunication was rapidly growing which led WorldCom to adopt the strategy of purchasing small long distance firms with limited geographic service areas and consolidating carriers with large market shares. This was the company’s main key profit. Indeed, by adopting this strategy, WorldCom grew quickly by expanding internationally in South America, West America, Europe and Latin America. As a result of this, WorldCom became the leader in this industry.
- The pressure that Ebbers put on his employees as he wanted by the number one stock in Wall Street by increasing the revenue. He demanded ...view middle of the document...

2- What is the boundary between earnings smoothing or earnings management and fraudulent reporting?
Smoothing earnings is not preferred but in the same time is not an illegal act. It basically make the earnings seems more smooth by reducing the fluctuations. By smoothing the earnings, the net income fluctuations from one period to the next will be less. Indeed, companies practise this due to the fact that investors prefer to pay premium for stocks that are stable in their earnings.
However, fraudulent reporting is an illegal act as managers tend to practise it with the intention to hide and misreport the company’s financial figures and information. It actually misreports amounts and discloses false financial information and figures.
Regarding the case, WorldCom did commit fraud as it has practised fraudulent reporting. In fact,
- It has released accruals of $3.3 billion, which is way below the accruals for the future cash payments.
- It stopped recognising expense for unused network capacity and capitalized $771 million of non-revenue generating line expense into an asset account. Then, WorldCom reverse $227 million of capitalized amount to make accrual release from liability.
- Also, Sullivan intentionally didn't provide all the necessary information to the internal audit department by sending them only hat information which puts the company in a better position by having less expenditure, bad debt and future cash payments.
- Besides, WorldCom warned the employees not to reveal all the information for the external auditors (Anderson).
- WorldCom intentionally altered accounts and transferred millions in accounts balance in order to deceive Anderson.
3- Why were the actions taken by WorldCom managers not detected earlier? What processes or systems should be in place to prevent or detect quickly the type of actions that occurred in WorldCom?
- Sullivan hided the original accounting entries so that no one can have an access to them. Also, the accountant who did those entries were afraid to loss everything if they spoke. Thus, it made it very difficult for anyone to find out.
- The internal and external auditors were far away from the true information as the information provided was the misrepresented one.
- The role of board of directors was weak as they were not involved with anything. They actually barely interact with each other. They have actually left Sullivan to manage the company the way he wants.
Indeed, several actions should be been taken in order to prevent such chaos in the company:
- The board of directors should have exercised their powers and should have been more involved about the company’s decisions.
- A more powerful and restricted legal system should have been adopted.
- A more effective system for measuring unethical behaviours in the company.
- A more favourable reporting system to encourage the employees to report any unethical and illegal behaviour in the company, which will affect the...

Other Essays Like Wc Question 1

Hai I Love You Essay

3272 words - 14 pages KOLEJ UNIVERSITI TUNKU ABDUL RAHMAN Faculty of Accountancy, Finance and Business Faculty of Applied Sciences and Computing Academic Year 2015/2016 ------------------------------------------------- ------------------------------------------------- ABDT2043 FUNDAMENTALS OF MARKETING ------------------------------------------------- COURSEWORK SPECIFICATION Coursework Assessment (40%) No. | Contributions to coursework | % of contribution | 1

Déréglementation De L’Industrie De L’électricité Aux États-Unis Et Impacts Sur Les Exportations Pour L’Industrie énergétique Canadienne Et Québécoise

3891 words - 16 pages ; La déréglementation de l'industrie de l'électricité aux États-Unis (septembre 2001)'' (réf. 1).La déréglementation aux États-Unis a permis à une multitude de compagnies d'électricité privées de se concurrencer entre elles en brisant leur monopole sur leur territoire respectif au

Management Of Malignant Pleural Effusions

4039 words - 17 pages Introduction Malignant pleural effusion (MPE) is a complication of advanced cancer commonly encountered in the palliative care setting, and is often the cause of a significant reduction in the patient’s quality of life. This study will describe three cases and review the evidence regarding the management of MPE. Case Presentation Case 1 Mrs A is an 83 year old female. She initially presented with significant ascites and investigations

Australian English Language

8031 words - 33 pages ). According to this purpose the main task of this degree includes carrying out of Australian English analysis using information about Australian speech in different fields.In compliance with specified purpose and main task of the research the following tasks were set in this project:1. Firstly, to examine Australian English itself, its peculiarities, history, origin, spelling and so on.2. Secondly, to examine Australian slang including information

Linux As A Personal Desktop Operating System

5191 words - 21 pages know the program names that correspond to the menu items − so here's a trick that allows you to do that easily: 1. Find the menu item by clicking the Main Menu button and then navigate to the item in question. 2. Don't select the item, but right−click on it instead. In the resulting submenu, select the Put in run dialog option. This opens up a Run program... dialog with the corresponding command name in it: The screenshot above shows how this

Harvard Reference

5382 words - 22 pages ....................................................................................................................................................................................................................................... 1 Key terms...................................................................................................................................................................................................................................... 7 Abbreviations and symbols used in referencing

The Separation Of Capital Ownership And Control

1577 words - 7 pages outcome” that benefits the most from firm’s gain. The question here is to evaluate whether governance is efficient or not. In the US, a notable average amount of salary, which is more than $10 million per year, is paid to the chief executive. Not only high salaries (or overpayment as some may think), other factors like empire buildings, better office utilities and extra bonus causes high agent costs. These costs arise mainly due to lack of efficient

The Versatility And Flexibility Of OLED's

1014 words - 5 pages In April 1, 2002, organic light emitting diodes gain rise in the scientific community with their published, more practical form at Ames Laboratory. “Scientists at the U.S. Department of Energy's Ames Laboratory, in collaboration with scientists at the University of Michigan, Ann Arbor, have developed and demonstrated a novel, fluorescence-based chemical sensor that is more compact, versatile and less expensive than existing technology of its

Comparing The Moral Virtues Of Antony And Julian The Apostate

1103 words - 5 pages Roman emperor Julian the Apostate and Christian leader Antony both exhibited many qualities of character during their existence. Both of them led very distinctive lives although shared several ethical values. Book 25 of “The Later Roman Empire” and the book “Early Christian Lives” show concrete evidence of this. In the following essay, I will argue how both leaders’ lives were devoted to their religious beliefs and their mutual cardinal virtues

Living In A Cashless Society

1637 words - 7 pages question we might ask ourselves is what is a cashless society? What are the implications of living in a cashless world? To begin with, a cashless society could be regarded as a world where all bills and debits are paid for with the use of electronic money such as bank and credit cards, direct debits, and online payment. (Business Defintion for: Cashless Society, 2009). Looking back to history, we could see that our ancestors once lived in a cashless

The French And Indian War: The "Real" First World War

1955 words - 8 pages events and their possible impact upon the two great European powers of focus. The author begins by explaining both potential and actual events that initially caused the outbreak of the French and Indian War. He sums up the state of the world in an effective if not all too blunt statement saying “England and France had been at war since—well, it seemed like forever” (pg.1). This quote by itself sets the tone for what is to follow. The author

Related Papers

Total Quality Managment Essay

1867 words - 8 pages IMSE561/EMGT525 - TOTAL QUALITY MANAGEMENT AND SIX SIGMA HOMEWORK-6 Name: Shyam V.H Karumanchi UM ID 0833-3824 Question 1: Describe the design procedure for robust design REFERENCES: 1. Chapter 20 Quality engineering lecture notes Products and services should be designed to be inherently defect free and of high quality. Robustness The product or process performs its intended function well within user profiles and insensitive to the

Horton Building Supplies Solution Essay

2007 words - 9 pages Questions 1. Calculate HBS's cash cycle for the fourth quarter Inventory Period= 90 / (1149.9 / 1302.1) = 101.91 Average collection period= 90 / (1543.9 / 1338.8) = 78.04 Average Payment Period= 90 / (1149.9 / 304.4) = 23.82 Cash Cycle= 101.91-78.04-23.82 = 156.13 (B) Explain the Meaning of your estimated.   | 31/3 | 30/6 | 30/9 | 31/12 | IP | 171.7959 | 81.73759 | 65.3962 | 101.9123 | ACP | 80.67912 | 78.71666 | 56.2496

Analog Communication Essay

842 words - 4 pages , if the input is lesser than the threshold voltage then a new "0" is generated at the output. Equation Used In The ASK Mathematically, equation of amplitude-shift keying is Vask (t) = [ 1 + Vm (t) ] [A/2 cos (wct) ] where vask (t) = amplitude-shift keying wave vm(t) = digital information (modulating) signal (volts) A/2 = unmodulated carrier amplitude (volts) Wc = analog carrier radian

Operation Management Assignment Solution

1991 words - 8 pages OPERATIONS MANAGEMENT MGCR 472 ASSIGNMENT # 1 SOLUTION Question 1 (10 points) a) Labor productivity: Before: After: = 7 / (3*8) = 0.292 titles per labor-hour. = 12 / (3*8) = 0.5 titles per labor-hour. Growth = (.5 – .292) / .292 = .714 or 71.4%. b) Multifactor productivity Before: After: = 7 / ($480 + $300) = .008974 titles per $ cost. = 12 / ($480 + $600) = .011111 titles per $ cost. Growth = (.011111 - .008974) / .008974 = .238 or