Audit and Wall Street Composition

THE ACCOUNTING FRAUD snabel-a WORLDCOM:

THE REASONS, THE CHARACTERISTICS, THE RESULTS, AND THE

LESSONS LEARNED

simply by

JAVIRIYAH ASHRAF

A Thesis submitted in partial fulfillment of the requirements for Honors in the Key Program in Accounting

in the College of Business Administration

in addition to The Burnett Honors School

at the College or university of Port orange fl

Orlando, Florida

Spring Term

2011

Thesis Chair: Doctor Pamela Roush

Abstract

The economic wealth of the late 1990s was characterized by a perceived extensive growth that increased the expectations of the company‟s efficiency. WorldCom, a telecommunications organization, was a sufferer of these expectations that triggered the evolution of a fraud designed to deceive the public until the economic view improved. Through understanding what generated the scam, how the fraudulence grew, and what their effects were, lessons can be derived to find a better knowledge of the reasons lurking behind a fraud and to stop future frauds from occurring or growing as big as the WorldCom scam did.

ii

Acknowledgements

Dr . Roush, on her behalf patience, on her advice, on her behalf time, and for her knowledge. Dr . Benford and Dr . Gibbs, because of their continued support and period as panel members. Gene Morse, the internal auditor in WorldCom once all this occurred, for his internal regarding the case.

Thanks.

iii

Dedications

For my family, who fed me, clothed me, and distracted myself, all to be sure I stay sane throughout this knowledge getting experience.

For the numerous glasses of tea that made me fall asleep and saved myself from info overload. To get my grandfathers: the businessmen.

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Articles

Introduction..................................................................................................................................... 1 Causes............................................................................................................................................. 3 Internal Environment.................................................................................................................. 3 Technique (or shortage thereof)........................................................................................................ a few Company Tradition.................................................................................................................... 5 Business Governance.......................................................................................................... 10 Auditing: to detect in order to neglect................................................................................................ 16 Audit Committee................................................................................................................... 14 Internal Audit........................................................................................................................ 15 External Auditors.................................................................................................................. 16 Exterior Environment............................................................................................................... 18 Double Bubble...................................................................................................................... 18 Avarice at Wall Street.............................................................................................................. 20 Triggers Conclusion.................................................................................................................... 23 Characteristics............................................................................................................................... 25 Definition of Fraud................................................................................................................... 25 The Misstatement of Line Costs...

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