Worldcom Essay

721 Words Jul 6th, 2015 3 Pages
Introduction
On July 21, 2002, WorldCom, the second largest telecommunications company in the U.S applied for bankruptcy protection. The failure of WorldCom was due to the bad decisions of its executives to manipulate earnings with improper accounting entries. The key executives involved in this fraud were CEO Bernard Ebbers and CFO Scott Sullivan. Also, the accountants Bufford Yates, David Meyers and Troy Normand were all involved in this event. In this case, the accountant Troy Normand was pressured by Sullivan to prepare improper accounting entries. He was told to mark operating costs as long-term investments, which is a part of the assets. In this way, huge losses in the operation became enormous profits. The purpose of this
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In fact, Troy Normand had other alternatives, and he should have moral courage. Moral courage is the courage to act with fairness, respect, responsibility, honesty and compassion even when the risks of doing so are substantial. Furthermore, Moral courage does not back us fearfully into dangerous corners because by follow the ethical standards, it is less about hazards and obstacles than losing job and bringing bad impact on the company. Troy Normand could refuse the requirement from Scott Sullivan. For example, he could choose to resign or report this fraud activity to the audit committee or Securities and Exchange Commission to let them investigate this event instead of keeping silent.
Major Stakeholders and Potential Impact on Them
The bankruptcy of WorldCom had a bad influence on the stakeholders. First, because the investors and clients did not trust the company anymore, stockholders had lost almost two trillion of dollars, and more than half million of the employees lost their jobs. Secondly, WorldCom’s bankruptcy also damaged the company’s customer service. Time warner Inc and United States Department of Defense are both effected by the bankruptcy of WorldCom. Thirdly, bankruptcy caused many creditor bank account closed. According to the report, more than fifty banks lent money to WorldCom. They lost the money due to bankruptcy of WorldCom. Finally, the world stock

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