Essays on WorldCom

- Ethics refers to a set of moral principles. These set of principles affects how people or organizations make their decisions. Specifically business ethics refers to the moral rules/principles meant to govern the way businesses operate, how employees are treated, how decisions are made.

- Insider trading is the use of non-public information to benefit financially. The non-public information is, usually obtained by virtue of engaging with the organization in various capacities e.g. as a board member, employee of the firm, manager . Insiders are regarded as people who are privy to information about accompany that is not publicly available.

- Insider ...

Introduction

Shareholders are the owners of a company in legal terms. Therefore, like any owner, shareholders also try to maximize their profit interests in any organization. In the past, organizations were more focused on balancing the wealth generation and distribution among different stakeholders such as shareholders, employees, management, and society. However, since the 1970s, private companies turned to maximize the profit of shareholders ignoring the interest of other stakeholders of the company. This has generated a huge profit for the share market, which, in the last 40 years, has expanded by almost ten times. Other stakeholders, especially the employees, have suffered in ...

There are six main categories of corporate failure causes: poor strategic decisions, overexpansion, dominance of CEOs, greed, pride and power, failure of internal controls, and ineffective board of directors (Hamilton and Micklethwait, 2006). Business collapse can happen in cases where companies do not fully comprehend the relevant business drivers when they decide to expand to new lines of products and services, or meet the demands of additional geographic markets. These lead to poor strategic decisions because they fail to recognize the importance of risk management in their respective industries. They should be able to determine the overall impact ...

Article Summary

The article sheds light on how large corporations such as Enron and WorldCom have been involved in malpractices related to the way these corporations were run. Both Enron and WorldCom were guilty of ignoring the demands of the stakeholders. Therefore, there is a strong need for major changes in the way such corporations are run, and for environmental and social factors to be kept in mind. One way of pleasing all parties is through a process called Socially Responsible Investing or SRI. SRI does not mean that businesses ignore the financial side of things and safeguard social and environmental factors at the ...

Introduction

Accounting and Finance are two different fields, but most of the people associated both of them are identical. However, the concepts of both of these provisions are totally different from each other. Accounting is the name of recording the day to day transaction, while finance is the name of utilizing the funds of the company at a place from where the likelihood of earning would be on a higher node. Both of the concepts of Accounting and finance are two important things from the standpoint of an organization and no organization could be in the line of economically based prosperity ...

Introduction

Corporate governance has sprung out as a concept in response to the increasingly critical corporate scandals that were taking position in the late 1900s. The concept has remained strongly concerned with the areas of corporate risk. Nonetheless, the notion surrounding Corporate Governance is becoming more widely applicable and useful, for both the small and big organizations. The concept is also an increasingly substantial facet of a job and organizational management that transcends to global government and trade laws; as easily as to the international corporations, organizations and markets. The term corporate governance is a conglomeration of two words; corporate and management. The ...

Executive Summary

COSO, the Committee of Sponsoring Organizations, has a mission to offer thought leadership and guidance by developing comprehensive guidance and frameworks on risk management for risks, fraud deterrence and internal control. This program is primarily designed to enhance organizational governance and performance as well as reducing the level of fraudulent actions and claims in organizations. This program has an aim and vision to be a renowned thought leader all over the world in all marketplaces. COSO, by design, is a voluntary organization in the private sector that is dedicated to the improvement of quality in financial reporting. It attains this through effective ...

Discussion Paper

Introduction The idea of effective corporate governance and responsive corporate governance has gained momentum in the business environment of Australia and the United States of America after the global financial crisis. In United States of America, the scandals of Enron and WorldCom provided grounds for accessing effectiveness of corporate governance institutions in the United States of America. The paradigm of effective and responsive governance is a key determinant of the overall performance of corporates and the stakeholders as it champions the idea champion for transparency, fairness and accountability (Brink, 2011, p.49). The governments of United States of America and ...

HONEST AND INDEPENDENT AUDITORS

The first decade of the 21st century was marred with financial scandals. These scandals led to a worldwide financial crisis and the collapse of some economies. The events brought into focus the importance of the external auditors and their independence. After all, it is upon auditors’ recommendations that financial decisions are made. As can be seen in recent economic events, the recommendations of the external auditors would have profound impact not only on investors or stockholders but also on entire economies. The importance of auditor independence cannot be underestimated. Unfortunately, it is being brought to light precisely because of its ...

Sociologist Edwin Sutherland described white-collar crime as a crime committed by a person or people of high social class. The crimes are described as non-violent, and conducted with a high degree of professionalism. White-collar crimes are differentiated from the blue-collar crimes by the fact that they do not involve physical violence, or the threat of violence. In most cases, the crimes are motivated by the need for money and result in illegal monetary gain. One of the most notorious convicts of white-collar crime, Bernard Madoff, was in 2009 sentenced to one hundred and fifty years in prison after he was found guilty ...

The seemingly endless series of scandals affecting companies raises many controversies, questioning the involvement of intelligent executives in unethical behavior. Company control has drawn world consideration when the giant firms such as Enron in UK and WorldCom in US downfall in 2001 and 2002 successively. This paper seeks to analyze the relationship between the various ethical and regulatory, as well as governance issues. The primary ethical principle that applies to accountants is integrity, objectivity, and competence. Integrity refers to being honest and forthright in dealings and communication with others; objectivity means impartiality and freedom from conflict of interest. ...

Literature review

Introduction Corporate governance, the system used in the administration and control of corporate bodies has undergone a history of evolution to the point which it is today. In the last two decades, the advancement in technology have also seen a drastic change in corporate governance where the distinction between ownership and management has become more and more blurred and directors and management are usually now part owners of the firms that they work for. Ideally, corporate governance is a system which involves the establishment of a system of the management and control of companies through complex mechanisms of regulatory frameworks and money ...

ETHICAL AND LEGAL ISSUES IN BUSINESS

Several accounting fraud cases have been reported recently, some involving big companies such as Worldcom and Enron. One thing that these cases have brought out is that there are many ethical and legal issues involved in financial and accounting reporting. It is a probable case that such accounting malpractices such as the ones recorded by Worldcom and Enron date as far back as when financial transactions started being recorded. Technology has become an integral part of many business operations, including financial and accounting monitoring. The integration of technology into this business operation has brought out such issues as security threats ...

Abstract

Accounting scandals are business scandals that arise following the uncloaking of financial misdeeds by some trusted personnel in corporations. Some of the misdeeds usually involves some complex methods for embezzling, understating, misdirecting money, overstating the value of assets or in other words, underreporting the available liabilities. This is mostly accomplished in collaboration with workers or affiliate in corporations. In companies with public status, this kind of innovative accounting qualifies to fraud whereby investigations and inquiries are commenced by agencies of the government in place. In United States for instance, some of the government oversight agencies that are eligible to ...