WorldCom Inc., one of North America's largest and most profitable corporations was founded in 1983. The company WorldCom, Inc. operated data, Internet, hosting, international, and commercial voice businesses. The Company operated a global facilities-based communications network that provides international, data, and Internet services. was by and large an oil and gas trader. In 2001 it reported revenues of $21 Billion dollars US. In 2002 it was bankrupt. Its common shares traded at a high of almost $70 US in 1999 and in the Summer of 2002, they were trading for less than $1. WorldCom's financial auditors, Arthur Anderson, one of the largest worldwide public accounting firms would dissolve its partnership as a result of this financial scandal. You are required to analysis a paper, not just a listing of the questions and answers, which addresses, at minimum, the following:

1) An overview of events leading up to the scandal of WorldCom. Be sure to mention key figures and the pressures the company faced.

2) What were the inherent risks at WorldCom which the auditor should have been concerned with?

3) Discuss the key accounting policies of WorldCom.

4) Discuss the fall-out of WorldCom. What happened to the key figures? Arthur Anderson? Do you think the penalties were too much, too little?

5) Discuss the purpose of an audit and the role of the auditor. Was Arthur Anderson in breach of practice, professional, and ethical standards? If so please explain why.

6) In your opinion why did the WorldCom scandal happen? Who was at fault?

7) Briefly explain the Sarbanes Oxley Act. Could it have prevented the WorldCom Scandal? What do you think could have prevented it?