WorldCom Inc

From its inception in 1983 WorldCom Inc grew to be the second largest long distance telephone call operator in America. Throughout the 1990s the company grew through a serious of acquisitions and by April 1999 its market capitalisation was $186bn. However, by July 2002 the company had filed for bankruptcy. When it filed its 2001 10K Report with the SEC the company reported annual revenues of $37,668m, and Gross Assets of $33,706m and employed 80,000 at its peak.

WorldCom CEO Bernie Ebbers and the WorldCom Chief Financial Officer Scott Sullivan were both found guilty of charges of fraud. Ebbers was sentenced to 25 years in jail and Sullivan a much lesser sentence of 5 years, Sullivan entered into a plea bargain and testified against Ebbers. Over 35,000 employees lost their jobs with WorldCom and investors lost $175bn (3 times the size of Enron)

Q) Critically analyse the role of internal and external auditing failure in the companys collapse. Provide a detailed answer