Week 2 - Assignment 2.doc - CASE BRIEF Cynthia Cooper and...

CASE BRIEF
Cynthia Cooper and Worldcom
I. Whether Vice President of Internal Audit, Cynthia Cooper, should blow the
whistle on WorldCom’s $4 billion questionable accounting entries, $2 billion being
shifted from operating expenses to capital expenditures making the company
look as if it was generating income thus resulting in an investigation by the SEC.
A. Analysis . Worldcom was created by Bernie Ebbers, after taking the helm with
LDDS in 1985 then making it a public traded company by 1989 then changing the
name to Worldcom in 1995. After making Worldcom a publicly traded company
in 1985, Ebbers hired accounting firm, Arthur Anderson. In 2002, Ebbers
resigned as CEO after a $400 million personal loan to him from the company
came to light. Once, COO, John Sigemore was promoted to CEO, he asked
Cynthia Cooper to complete an examination and assessment of the books at
every division. Cooper went on to find $400 million taken from one division and
recorded as income boost. Another $2 million was found being reclassed from
operating expense to capital expense, which is illegal. Gene Morse and Cynthis
Cooper found several accounting entries with no supporting documentation.