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  • April 2004 (Revised September 2007)
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Accounting Fraud at WorldCom

By: Robert S. Kaplan and David Kiron
  • Format:Print
  • | Language:English
  • | Pages:18
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Abstract

The principal players in WorldCom's accounting fraud included CFO Scott Sullivan, the General Accounting and Internal Audit departments, external auditor Arthur Andersen, and the board of directors. The case provides sufficient detail to allow for a full discussion of the pressures that lead executives and managers to "cook the books," the boundary between earnings smoothing or management and fraudulent reporting, the role for internal control systems and internal audit to prevent or rapidly detect accounting fraud, the expectations about governance processes performed by external auditors and the board of directors, and the pressure and consequences when middle managers follow orders that they know are wrong. Written from the public record, the case contains numerous quotes from an individual involved in the WorldCom fraud that were reported by the Investigative Committee and Wall Street Journal articles about several of the individuals caught up in the situation.

Keywords

Governance Controls; Governing and Advisory Boards; Crime and Corruption; Ethics; Financial Reporting; Organizational Culture; Corporate Governance; Accounting Audits

Citation

Kaplan, Robert S., and David Kiron. "Accounting Fraud at WorldCom." Harvard Business School Case 104-071, April 2004. (Revised September 2007.)
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About The Author

Robert S. Kaplan

Accounting and Management
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Related Work

    • June 2005
    • Faculty Research

    Accounting Fraud at WorldCom (TN)

    By: Robert S. Kaplan
    • April 2004 (Revised September 2007)
    • Faculty Research

    Accounting Fraud at WorldCom

    By: Robert S. Kaplan and David Kiron
Related Work
  • Accounting Fraud at WorldCom (TN) By: Robert S. Kaplan
  • Accounting Fraud at WorldCom By: Robert S. Kaplan and David Kiron
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