10014_031710_18 - Should have stood up and said “No”...

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Fraud Triangle Pressure Rationalization Opportunity WorldCom (1999-2002) Unable to meet financial obligations/Wall Street expectations Pressure need to put an entry on the books to get numbers where they need to be. Public expectations. Filing deadline Opportunity boss told him to do it. No one else to check financial statements besides them Rationalization entry would cancel out next quarter Critical factor = pressure & that Myers gave into his boss.
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Unformatted text preview: Should have stood up and said “No” • Expected turnaround never happened • Problem = WorldCom’s weakening business • Make adjustment twice because they thought they knew what the error was • 3 rd quarter – something not right, needed to be corrected. Myers knew it was wrong • Capitalization of operating expenses • Reserve – offset against income. Subjective, easy to mess with • WorldCom ran out of reserves • Internal auditor Cynthia Cooper – uncovered the fraud...
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This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.

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