Executive Summary
Overview of Assignment
We are senior consultants from ABC Consulting, Inc., and we have the opportunity to share our team's case study on the WorldCom fraud. This report and presentation will be presented to CSB Systems, and will replace the traditional interview process. CSB Systems is in the process of acquiring a new telecommunications company, called TAT. Because WorldCom was part of the telecommunications industry, we felt it would be appropriate to present WorldCom as our case study.
Background
WorldCom, initially named Long-Distance Discount Services, got its start in a Mississippi coffee shop in 1983. Led by Bernard Ebbers, partners drew out their idea on a napkin for a long distance company that would eventually grow into a telecommunications giant. WorldCom attained its' top-ranking status through a series of more than 60 mergers. While WorldCom's expansion seemed extraordinary to the public, the future proved the success to be short-lived. WorldCom crumbled in June of 2002 when the company confessed to inflating earnings by $3.8 billion. The company filed for bankruptcy the following month. The investigation that followed led to an estimated total of $11 billion in fraud, the largest in U.S. history.
Observations
During the course of research and investigation, we made observations that were critical to the fraud/scandal in four primary areas. The areas are as follows:
? Corporate Culture
? The environment was one in which top management could run the organization unchecked
? Internal Control
? Internal controls, if present, were ineffective and circum ...