7-2internal control's five elements

7-2internal control's five elements - The elements of...

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The elements of internal control
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Control Environment integrity And Ethical values competence Board of directors and audit committee management Philo- sophy and operating style Organi- zation structure Assignment of authority and respon- sibility human resources policy and practices Control Environment
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Why did Worldcom go bankrupt? Worldcom is America's second largest telecoms company, which ranks in the Global Fortune 500 before this scandal. However, Worldcom were found 11billion profit misstatements through fraud and deception during 1998-2002.
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Why did worldcome go bankruptcy? The stock price of worldcom slumped from the highest $96 to 90 cents after this scandal. Worldcom filed for bankruptcy protection at the end of 2002,which became the biggest bankruptcy case in the history of America. Worldcom didn’t finish reorganization in 2003, and Worldcom’s four Executives (including company CEO and CFO) who admitted blackmail were criminal prosecuted by the federal court .
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Why did worldcome go bankruptcy? The SEC and the courts found: Worldcom’s board of directors give their CEO (Bernard Ebbers) absolute power, while Ebbers is lack of capabilities and enough experience. SEC said: The mechanism of balance of Worldcom is not weak ,but there is not the mechanism of balance.
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Why did worldcome go bankruptcy? The board of directors in Worldcom did not take responsibility of supervision and Management. It only takes 3-5 hours for the company's audit committee to have meetings every year. And audit committee only reviewed the final audit report or abstract every year. And audit committee have never put forward any proposals for modification to internal audit activities.
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Because worldcom provided a good paying and bonuses for its senior management , which are beyond senior’s contribution to worldcom,
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7-2internal control's five elements - The elements of...

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