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Unformatted text preview: that WorldCom may be trying to intentionally manipulate earnings numbers. At best, one must question the credit policy strategies of the firm, as this sort of reporting artificially raises the value of the company. As Cisco and Enron demonstrate, poor quality reporting can lead to manipulation of the market, profiting insiders while defrauding investors. The U.S. government has made an effort to improve the quality of reporting after recent financial scandals by passing the federal Sarbanes-Oxley Act of 2002. This Act created the "Public Company Accounting Oversight Board," charged with supervising the auditing process for public companies. In July 2003, the Securities and Exchange Commission issued a study recommending uniform accounting standards developed using a principles-based approach detailed enough to create a clear, operational standard resulting in greater transparency in financial reporting....
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- Spring '11