case from : ACCOUNTING FRAUD WORLDCOM

There will be a (7) seven page report,excluding figures, tables, appendices, and references,required for the term paper. The written report must be typed, single sided, and 1.5 lines-spaced. The following items and additional questions that will be provided later in the semester should be discussed in the term paper:

1)Briefly discuss the situation in the case.
2)Do some research on issues of the case and gather additional information if necessary.
3)Analyze the case and identify the problems in the case.
4)Present your recommendations if applicable.

Assignment Questions:

1. What the pressures that lead executives and managers to “cook the books”?
2. What is the boundary between earnings smoothing or earnings management and fraudulent reporting?
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 types of actions that occurred in WorldCom?
4. Were the external auditors and board of directors blameworthy in this case?
Why or why not?
5. Betty Vinson: victim or villain? Should criminal fraud charges have been brought against her? How should employees react when ordered by their employee to do something they do not believe in or feel uncomfortable doing?

Answer of question 3

To address the term paper requirements and answer the assignment questions regarding the WorldCom accounting fraud case, follow these steps:

Step 1: Introduction
Briefly discuss the situation in the WorldCom case, emphasizing the context of accounting fraud. Provide background information on WorldCom's operations, industry, and the individuals involved.

Step 2: Research and additional information gathering
Research the case further to gather additional information. Make use of reliable sources such as academic journals, articles, books, and official reports. This research will provide a comprehensive understanding of the case and its various dimensions.

Step 3: Analysis of the case and identification of problems
Analyze the case using the information gathered from Step 2. Identify and discuss the key problems related to the WorldCom accounting fraud. Consider the financial, ethical, and legal issues involved. Explore the motivations behind the executives and managers' decision to "cook the books."

Step 4: Recommendations
If applicable, present your recommendations based on your analysis. Propose measures or strategies that could have prevented or mitigated the accounting fraud at WorldCom. Consider areas such as internal controls, corporate governance, ethics training, and regulatory oversight.

Step 5: Addressing the assignment questions
Answer the assignment questions one by one, drawing evidence from your research and analysis:

1. Discuss the pressures that lead executives and managers to "cook the books."
2. Define and explain the boundary between earnings smoothing or earnings management and fraudulent reporting.
3. Analyze why the actions taken by WorldCom managers were not detected earlier. Discuss the processes or systems that should be in place to prevent or quickly detect similar actions.
4. Evaluate whether the external auditors and board of directors were blameworthy in this case, providing reasons for your assessment.
5. Analyze whether Betty Vinson should be considered a victim or villain and whether criminal charges should have been brought against her. Discuss how employees should react when ordered to do something they do not believe in or feel uncomfortable doing.

Step 6: Conclusion
Summarize your findings and key points from the term paper. Reinforce the significance of the case and its implications for accounting, corporate governance, and ethics.

Remember to format the term paper according to the given guidelines (7-page length, excluding figures, tables, appendices, and references), using a typed, single-sided format with 1.5 line spacing. Cite your sources appropriately and include a list of references at the end of the paper.

To write your term paper on the WorldCom accounting fraud case, you will need to follow these steps:

1. Briefly discuss the situation in the case:
a. Start by providing an overview of the WorldCom accounting scandal, including the timeline and key events.
b. Explain how the fraud was uncovered and the impact it had on the company and its stakeholders.

2. Do some research on issues of the case and gather additional information if necessary:
a. Utilize reputable sources such as academic journals, news articles, and books to gather information about the case.
b. Focus on understanding the underlying issues, such as the motivations behind the fraud and the factors that enabled it to happen.

3. Analyze the case and identify the problems:
a. Analyze the key factors that led to the accounting fraud, such as the pressures faced by executives and managers, corporate culture, and deficiencies in internal controls.
b. Identify any ethical dilemmas or conflicts of interest that may have contributed to the fraudulent actions.

4. Present your recommendations if applicable:
a. Based on your analysis, provide recommendations on how similar situations can be prevented in the future.
b. Consider discussing the importance of strong corporate governance, effective internal controls, ethical leadership, and transparent financial reporting.

Now, let's address the assignment questions:

1. What are the pressures that lead executives and managers to "cook the books"?
a. Research and identify the various pressures faced by executives and managers, such as meeting financial targets, earning bonuses or stock options, and maintaining stock prices.
b. Analyze how these pressures can lead to unethical or fraudulent practices.

2. What is the boundary between earnings smoothing or earnings management and fraudulent reporting?
a. Research the concept of earnings smoothing and earnings management, which are legal accounting practices used to manage financial results.
b. Discuss how these practices can cross the boundary into fraudulent reporting if they involve deliberate manipulation or misrepresentation of financial information.

3. Why were the actions taken by WorldCom managers not detected earlier? What processes or systems should be in place to prevent or quickly detect similar actions?
a. Research and analyze the deficiencies in WorldCom's internal control systems and auditing processes.
b. Discuss the importance of robust internal controls, independent external audits, and whistleblower mechanisms in preventing and detecting fraudulent activities.

4. Were the external auditors and board of directors blameworthy in this case? Why or why not?
a. Analyze whether external auditors and the board of directors fulfilled their responsibilities in ensuring accurate financial reporting and detecting fraud.
b. Consider any failures or conflicts of interest that may have led to their inability to detect the fraud.

5. Betty Vinson: victim or villain? Should criminal fraud charges have been brought against her? How should employees react when ordered by their employer to do something they do not believe in or feel uncomfortable doing?
a. Discuss the actions of Betty Vinson, an employee involved in the fraudulent activities at WorldCom.
b. Analyze her role and the factors that may have influenced her decisions.
c. Debate whether criminal charges were justified in her case and discuss ethical considerations.
d. Reflect on the ethical responsibilities of employees and potential courses of action when faced with unethical requests from their employer.

Remember to support your arguments with evidence from research and refer to relevant case studies and academic literature. Good luck with your term paper!