The Accounting Scandal at WorldCom Essay Example | Topics and Well Written Essays - 7500 words

The Accounting Scandal at WorldCom - Essay Example The case study shall then discuss the specific nature, and occurrence of financial statement fraud and examines how the fraud was discovered from a forensic accounting perspective. The research shall also look at the results of the regulatory investigation and criminal prosecution in trying to understand the potential consequences of the fraud to the corporation -- the management, board of trustees, shareholders - the employees and the investing public. The research shall conclude with a discussion of the lessons offered by the WorldCom case for evaluating future financial statement and accounting fraud cases. The turn of the century saw Corporate America hitting the news headlines many a time nationally and internationally; however, for the wrongest reasons - disgraceful scandals of financial accounting frauds by some of the most high-held. I. Introduction The turn of the century saw Corporate America hitting the news headlines many a time nationally and internationally; however, for the wrongest reasons - disgraceful scandals of financial accounting frauds by some of the most high-held corporations. Beginning with Xerox Corporation in 2000, a series of financial accounting scandals surfaced the corporate American landscape in these years, exposing the depraved and disgraceful faces of corporate greed and corruption. Disclosing fraudulent misrepresentation in financial statements worth multi-million dollars and/or other accounting irregularities, eventually collapsing and filing bankruptcy, many large and reputed companies such as Enron, Tyco International, Kmart, Global Crossing, WorldCom, et al literally shocked the business world. The exposure not only resulted in indictment and ignominy of the principal players in the fraud and potential losses to the company and public investors but also caused an inevitable erosion of public conf idence and trust in corporate actions, the cornerstone of U.S. market capitalism. The series of financial accounting frauds that surfaced the corporate American landscape in the late 1990s and early 2000s has brought to fore the role and significance of forensic accountants and forensic accounting perspectives - "the how and why" of financial statements - in corporate accounting and auditing practices. [Thiede, 2003]Â