Cynthia Cooper

CLINTON, Miss. $--$ Sitting in his cubicle at WorldCom Inc. headquarters one afternoon in May, Gene Morse

stared at an accounting entry for $$500$ million in computer expenses. He couldn't find any invoices or

documentation to back up the stunning number.

$"$Oh my gosh," he muttered to himself. The auditor immediately took his discovery to his boss, Cynthia Cooper,

the company's vice president of internal audit. "Keep going," Mr$.$ Morse says she told him.

A series of obscure tips last spring had led Ms$.$ Cooper and Mr$.$ Morse to suspect that their employer was

cooking its books. Armed with accounting skills and determination, Ms$.$ Cooper and her team set off on their

own to figure out whether their hunch was correct. Often working late at night to avoid detection by their

bosses, they combed through hundreds of thousands of accounting entries, crashing the company's computers

in the process.

By June $23,$ they had unearthed $$3\mathrm{.}8$ billion in misallocated expenses and phony accounting entries. It all

added up to an accounting fraud, acknowledged by the company, that turned out to be the largest in corporate

history. Their discoveries sent WorldCom into bankruptcy, left thousands of their colleagues without jobs and

roiled the stock market.

At a time when dishonesty at the top of U$.$S$.$ companies is dominating public attention, Ms$.$ Cooper and her

team are a case of middle managers who took their commitment to financial reporting to extraordinary lengths.

As she pursued the trail of fraud, Ms$.$ Cooper time and again was obstructed by fellow employees, some of

whom disapproved of WorldCom's accounting methods but were unwilling to contradict their bosses or thwart

the company's goals.

WorldCom is under investigation by the Justice Department and the Securities and Exchange Commission.

Scott Sullivan, WorldCom's former chief financial officer and Ms$.$ Cooper's boss, has been indicted. He has

denied any wrongdoing. Four other officers have pleaded guilty and are cooperating with prosecutors. Federal

investigators are still probing whether Bernard J$.$ Ebbers, the company's former chief executive, knew about the

accounting improprieties. Since the initial discoveries, WorldCom's accounting misdeeds have grown to $$7$

billion.

Behind the tale of accounting chicanery lies the untold detective story of three young internal auditors, who

temperamentally didn't fit into WorldCom's well$-$known cowboy culture. Ms$.$ Cooper, $38$ years old, headed a

department of $24$ auditors and support staffers, many of whom viewed her as quiet but strongwilled. She grew

up in a modest neighborhood near WorldCom's headquarters and had spent nearly a decade working at the

company, rising through its ranks. She declined to be interviewed for this story. Mr$.$ Morse, $41,$ was known for

his ability to use technology to ferret out information. The third member of the team was Glyn Smith, $34,$ a

senior manager under Ms$.$ Cooper. In his spare time he taught Sunday school, took photographs and bicycled.

His mom had taught him and Ms$.$ Cooper accounting at Clinton High School.

$1.$ What are the overall consequences of the choices made at WorldCom $$ to employees, to shareholders and to other stakeholders $($you may need to seek out other sources to find out the specifics$).$

$2.$ Describe the different choices made by Cynthia Cooper and Betty Vinson.

$3.$ Analyze the decisions made by these two women based on the ethical approaches discussed in the text and in class.

$4.$ Analyze the decisions made by these two women using the cardinal virtues and accounting codes of conduct.

$5.$ What were the consequences to Cynthia Cooper and Betty Vinson both personally and professionally? Consider what happened to them during the time of the articles as well as doing research on what has happened to them since.

$6.$ Try to put yourselves in the situation of these women and suggest improvements, if any, to the ethical decisions made by these two women that you would make based on your analysis above. How would things have turned out differently?

$7.$ What do you recommend that would make it more likely that accountants would make ethical choices when confronted with them?

At least $3$ professional sources must be cited $($crowd$-$sourced sites such as Wikipedia are not considered to be professional and should not be used$).$