WorldCom Fraud Case Questions for Review

Accounting 361 Professional Ethics for Accountants

Questions for Research and Discussion I. What factors in the WorldCom case support the conclusion that CEO Bernie Ebbers knew about the financial Statement fraud? What factors his defense that did not know about the fraud? 2. If the fraud had not been detected when it was, how long do you think it might have continued and how would it have ultimately been revealed? 3. How could the fraud at WorldCom been prevented? 4. Which one person do you think is most responsible for the fraud being uncovered? Please explain your reasoning. S. Six WorldCom employees were convicted in the case. Which of these do you believe is the most responsible for the fraud? Why? 6. If Sarbanes-Oxley Section 404 had been in place before the fraud occurred, to what extent do you believe it would have prevented or reduced the fraud? 7. Compare and contrast the degree of moral courage exhibited by internal auditors Cynthia Cooper at WorldCom and Deidre DenDanto at Sunbeam. 8. The audit form of Arthur Andersen claimed they followed Generally Accepted Auditing Standards and were misled by WorldCom executives, yet they settled the investor lawsuits and two partners were sanctioned. What audit test do you believe Andersen could have performed to detect the fraud? 1-20