Question

Assess the strengths of the WorldCom’s internal controls during their fraud scandal. Where are the weaknesses and how might these lead to fraud? How could you address these weaknesses in order to improve them? What measures could you take to ensure this would improve the weaknesses?

Fraud Scandal: https://www.sec.gov/litigation/complaints/comp17829.htm

Answer 1

WorldCom, now known as MCI Inc., was established in 1983 as LDDS (Long Distance

Rebate Service). The media communications organization experienced fast development in the 1990s

principally because of a few vast acquisitions. The organization progressed toward becoming WorldCom Inc. in 1995

following the buy of Williams Telecommunications Group Inc. for $2.5 billion

(foxnews.com). In 1998, WorldCom finished its biggest corporate merger to date, obtaining

MCI Communications Inc. for $40 billion. Likewise in 1998 were the mergers with Brooks Fiber

Properties Inc. furthermore, CompuServe Corp. WorldCom and Sprint Corp. consented to converge in 1999;

nonetheless, in 2002 the union was hindered by controllers in both the U.S. furthermore, Europe out of fears

the organization was winding up too substantial (foxnews.com). The organization's development throughacquisition methodology was hindered by this; notwithstanding, the 65 acquisitions that had officially taken

put made the organization exceptionally aggressive. At the tallness of the organization's prosperity,

WorldCom's stock was exchanging above $64 per share (money.cnn.com). In any case, the organization's

relentless development and benefits stopped when fake money related announcing was in the end

revealed.

In mid 2002, amid an inner review, it was found that WorldCom had made

a few exchanges that were not as per sound accounting guidelines, or

U.S. GAAP (money.cnn.com). In March of 2002, soon after the interior review, the SEC

asked for documentation from WorldCom in association with these exchanges. It was found

that all through 2001 and the main quarter of 2002, WorldCom had dishonorably represented