WorldcomEssay Preview: WorldcomReport this essayCASE TAKEAWAYSIllustrates pressures that lead executives and managers to “cook the books”Addresses the boundary between earnings smoothing or management and fraudulent reportingDemonstrates the role for internal control systems and internal audit to prevent or rapidly detect accounting fraudBrings to focus the expectations about governance processes performed by external auditors and the board of directorsDemonstrates the pressure and consequences when middle managers follow orders that they know are wrong.WORLDCOMWorldCom is a for profit organization that specialized in local, long distance and international plans, high cable internet, prepaid cards, and collect calling
A new series based on the award winning CMA-L-14A.WELCOME AWARD Winning and Promoting a brand new series!SINGAPOREWELCOME is the leading provider of a comprehensive and personalized online and print communications technology system for public, non corporate clients to access their current and upcoming events, events and information. The company has the capacity to offer high speed and automated telephone support and email support, as well as an extensive mobile network, on almost every topic, offering customers the highest possible levels of quality service for the highest customer satisfaction. Since the inception of our original offering in May of 2014, WELCOME has been involved in the delivery of services to over 100 markets around the world including Japan, Europe, China, the Netherlands, Germany, Hong Kong, Japan, the United States for the National Consumer Association and the World’s Finest Trade Organisation.WELCOME was founded in May, 2014 in partnership with CMC Holdings, Inc. The company is the recipient of a 9.3 million pound LTV loan to its U.S. subsidiary, WELCOME. WELCOME is expanding worldwide and offers a large, flexible network of services. CMC has over 500 headquarters in 15 countries of the world spanning nearly 70 countries including China, Italy, Switzerland, Spain, Japan and South Korea. WELCOME operates in a low cost system. CMC serves as one of the world’s leading providers of corporate networking services, providing networking services throughout the world, particularly for high level public sector entities. For more information, visit www.WELCOME.com or call +1- (888) 744 8022 on 800 078 3100.Visit our Web site at www.Welcome.com/VisitAwayVisit our web site at www.Welcome.com/VisitandGet In your own neighborhood to learn more about our location, and to get notified when WELCOME is expanding to other locations, check the official WELCOME mobile site, www.WELCOMEAway.com.
A new series based on the award winning CMA-L-14A.WELCOME AWARD Winning and Promoting a brand new series!SINGAPOREWELCOME is the leading provider of a comprehensive and personalized online and print communications technology system for public, non corporate clients to access their current and upcoming events, events and information. The company has the capacity to offer high speed and automated telephone support and email support, as well as an extensive mobile network, on almost every topic, offering customers the highest possible levels of quality service for the highest customer satisfaction. Since the inception of our original offering in May of 2014, WELCOME has been involved in the delivery of services to over 100 markets around the world including Japan, Europe, China, the Netherlands, Germany, Hong Kong, Japan, the United States for the National Consumer Association and the World’s Finest Trade Organisation.WELCOME was founded in May, 2014 in partnership with CMC Holdings, Inc. The company is the recipient of a 9.3 million pound LTV loan to its U.S. subsidiary, WELCOME. WELCOME is expanding worldwide and offers a large, flexible network of services. CMC has over 500 headquarters in 15 countries of the world spanning nearly 70 countries including China, Italy, Switzerland, Spain, Japan and South Korea. WELCOME operates in a low cost system. CMC serves as one of the world’s leading providers of corporate networking services, providing networking services throughout the world, particularly for high level public sector entities. For more information, visit www.WELCOME.com or call +1- (888) 744 8022 on 800 078 3100.Visit our Web site at www.Welcome.com/VisitAwayVisit our web site at www.Welcome.com/VisitandGet In your own neighborhood to learn more about our location, and to get notified when WELCOME is expanding to other locations, check the official WELCOME mobile site, www.WELCOMEAway.com.
Provided telecommunications to customers nation wide with business corporations making up the majority of the 20 million customers they served.It began in the early 1980s and its main marketplace was domestic, however their products were available for global use.GROWTH THROUGH ACQUSITIONWorldCom achieved its position as a significant player in the telecommunications industry through the successful completion of 65 acquisitions.Between 1991 and 1997, WorldCom spent almost $60 billion in the acquisition of many of these companies and accumulated $41 billion in debt.Two of these acquisitions were particularly significant.The MFS Communications acquisition enabled WorldCom to obtain UUNet, a major supplier of Internet services to businessMCI Communications gave WorldCom one of the largest providers of business and consumer telephone service.CHALLENGES WITH ACQUISITION STRATEGYManagement must deal with the challenge of integrating new and old organizations into a single smoothly functioning business.This is a time-consuming process that involves thoughtful planning and considerable senior managerial attention if the acquisition process is to increase the value of the firm to both shareholders and stakeholders.
With 65 acquisitions in six years and several of them large ones, WorldCom management had a great deal on their plate.The requirement to account for the financial aspects of the acquisition.The complete financial integration of the acquired company must be accomplished, including an accounting of assets, debts, good will and a host of other financially important factors.
This must be accomplished through the application of generally accepted accounting practices (GAAP).PROBLEMS WITH ACQUISITION STRATEGY – POOR INTEGRATIONEvery division and business unit was like its own silo, separate from all the other businesses.Senior management made little effort to develop a cooperative mindset among the various units of WorldCom.Inter-unit struggles were allowed to undermine the development of a unified service delivery network.Many processes were duplicate and inefficient.Capacity was expensive and very underutilizedThere was far too much redundancy, and WorldCom paid far too much to get itEND TO ACQUSITION STRATEGYIn 2000, the government refused to allow WorldComs acquisition of Sprint.The denial put an end to WorldComs acquisition-without-consolidation strategyLeft management a stark choice between focusing on creating value from the previous acquisitions with the possible loss of share value or trying to find other creative ways to sustain and increase the share price.
WHAT WENT WRONG?There was a perceived need to meet unrealistic securities market expectations and they had a culture that emphasized making the numbers above all else and the keeping of financial information hidden from those who needed to know.
There was a systematic attitude conveyed from the top down that employees should not question their superiors, but simply do what they were told and there were not outlets through which employees believed they could safely raise their objections.
WHY DID THEY DO THIS?Any time there is pressure to provide more than either a person is capable of or more than a person is willing to do, there is a tendency to take shortcuts.
PressureTo further their careerTo protect their livelihood.FINANACIAL MISREPRESENTATIONIn an effort to make it appear that profits were increasing, WorldCom would write down in assets it acquired while, at the same time, it included in this charge against earnings the cost of company expenses expected in the future.
The result was bigger losses in the current quarter but smaller ones in future quarters, so that its profit picture would seem to be improving.The acquisition of MCI gave WorldCom another accounting opportunity. While reducing the book value of some MCI assets by several billion dollars, the company increased the value of “good will,” that is, intangible assets by the same amount.
This enabled WorldCom each year to charge a smaller amount against earnings by spreading these large expenses over decades rather than years.The net result was WorldComs ability to cut annual expenses, acknowledge all MCI revenue and boost profits from the acquisition.WorldCom managers also tweaked their assumptions about accounts receivables, the amount of money customers owe the company.Management chose to ignore credit department lists of customers who had not paid