The Worldcom Fraud Scandal

Paper Summary:

This paper discusses the birth and development of accounting over time. The paper discusses the Generally Accepted Accounting Principles (GAAP) and the way in which the the U.S. accounting profession has been a self-regulated industry. The paper then examines the Worldcom fraud scandal and how this, along with other large-scale accounting fraud scandals, cast doubt on the profession's ability to regulate itself.

From the Paper:

"The Worldcom penalty, at $2.25 billion was one of the highest penalties ever obtained by an SEC enforcement action. Recently WorldCom outside directors agreed to pay an additional $18 million out of their own pockets (Scannell, 2005). It is obvious that the efforts of regulators and prosecutors are sending a clear and concise message to the professionals within the business community. Bishop, President of the Association of Chief Fraud Examiners (ACFE) says "It's a crime-not just aggressive accounting-and that individual [the controller] should not be aiding and abetting in a felony" (Sweeney and Marshall 2003, 20). If executives and corporate wrongdoers lied and committed accounting fraud in the past because they did not think they would get caught or they did not fear the punishment, this new environment should certainly make them think twice now."

Sample of Sources Used:

• AICPA (1970) Basic concepts and accounting underlying financial statements of business enterprises. Statement of the Accounting Principles Board No. 4. New York: AICPA.
• Alexander, J. A. (2005) History of accounting, net gain. On-line article. Retrieved 12 May 2008 from http://64.233.183.104/search?q=cache:iXiW4tnkcuwJ:documents.clubexpress.com/documents.ashx%3Fkey%3D7ZPfhrgSH4ej5qOo06gTZ1j%252FWfzYw%252BhpXBNOQ%252BbRiWgYV1UQpbPezRxbi%252FPDVo7X+Alexander+History+of+accounting,+net+gain.&hl=en&ct=clnk&cd=3
• Beasley, M. S. and Hermanson, D. R. (2004) Going beyond Sarbanes-Oxley compliance: Five keys to creating value. The CPA Journal, 74(6), 11.
• Colvin, G. (2002) Wonder women of whistle blowing. Fortune, 146, 56.
• Derrig, R. A., and Zicko, V. (2002) Prosecuting insurance fraud - a case study of the Massachusetts experience in the 1990s. Risk Management and Insurance Review 5(2), 77-95.

More papers on The Worldcom Fraud Scandal:

• Analytical Essay # 114437 : "The WorldCom Fraud"
• Essay # 59859 : "The WorldCom Scandal"
• Analytical Essay # 146426 : "WorldCom: Breaking a Promise"

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