ArticleWorldComCFOMagazine - WorldCom Accounting's Perfect...

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WorldCom Accounting's Perfect Storm Joseph McCafferty , CFO Magazine August 01, 2002 WorldCom's revelation in June that it improperly allocated $3.9 billion in expenses during the past five quarters, or longer, set a low-water mark in the current tide of accounting scandals. Most likely it's not the lowest. And identifying the next scandal may simply be a process of wading through the risk factors. Robert Simons, a professor at Harvard Business School, suggests that a confluence of events has created a climate in which accounting fraud isn't just possible, it's likely. This, he says, is accounting's perfect storm: the conjunction of unprecedented growth with inordinate incentive compensation, executive inexperience, and an extremely aggressive management culture. "Taken individually, some of these may be good news. But when they all come together, it's a disaster waiting to happen," says Simons, who has developed a Risk Exposure Calculator to gauge the degree of each factor. advertisement <a href=";pos=body;cat=np7;kw=;sz=336x280;t ile=5;ord=967172292869273500?" target="_body"><IMG
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This note was uploaded on 09/01/2010 for the course BAT4M BAT4M taught by Professor Katz during the Fall '05 term at Acadia.

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ArticleWorldComCFOMagazine - WorldCom Accounting's Perfect...

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