In the wake of this scandal, Mr. Sullivan was charged with fraud. Do you think this should be considered fraud? Why? Why was this unethical?

In June 2002, WorldCom, the telecommunications giant, surprised investors when it announced that it had overstated net income in the prior two years by $3.8 billion. At the center of the controversy was Scott D. Sullivan, the former CFO. WorldCom had leased telephone lines at a higher price. Under GAAP, these costs should have been reported as an expense on the income statement. Reportedly, however, Mr. Sullivan ordered that the costs be treated as money spent to purchase a fixed asset, so they were to be shown on the balance sheet as an asset and subsequently depreciated.