At the time that the scandal broke, WorldCom was considered to be the world’s second largest long-distance communications provider. There are multiple branches of this scandal itself; the first being that the company had inaccurately reported almost $4 billion in expenses as capital investments. As you can imagine, inappropriately categorizing those numbers had huge effects. It didn’t stop there however, as WorldCom followed up by also reporting that over $3 billion in profits had been inaccurately reported for over three years. An internal audit revealed this was done by manipulating the reserves. This topic because it had several ethics violations and it led to the Sarbanes-Oxley Act, which has by most been considered the largest business regulations reform act in over half a century!
The paper will consist of an introduction to WorldCom and a medial looking at what the company did prior to the scandal. It will then go into the first scandal of the incorrectly reporting capital investments, then into what the audit then exposed the falsifying of profits. The paper will detail where the responsibility lied with these decisions and the outcome of those individuals involved and the company itself. To close out the paper it will look at what regulations came from the scandal with newly implemented laws and what businesses can do to elevate this happening in the future.
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