WorldCom Essay Example | Topics and Well Written Essays - 500 words

WorldCom - Essay Example According to the case, Ebbers and Sullivan were the main controllers and master minds behind the success of WorldCom from the time it was Long Distance Discount Services (LDDS). The mention of this massive success is however overlapped in the case by the accusations of bringing down the company to bankruptcy as a result of massive accounting irregularities, fraud and conspiracy. Once the company started going under and an external auditing firm hired to come and audit it, the recommendations from this audit firm were not taken into action immediately by the auditing committee of the company. The case explains that if immediate actions had been taken to examine the massive accounting irregularities discovered by Cooper (an external auditor), then WorldCom would have been saved from bankruptcy. But this was not to be the case. The board on the other hand had so much faith in Ebbers leadership as CEO and they were also afraid of the implications his withdrawal of his shares and input to the company would have on WorldCom that they continued to lend him loans and at a lower interest rate. These loans given to Ebbers were for his own personal growth and maintenance and they accumulated to over $300 million which was company money but no repayments were forthcoming to benefit the company. Sullivan together with the fraudulent stock broker firm (Salomon Smith Barney brokers) hid the truth of the company’s economic performance from the shareholders and stockholders. According to these two crucial groups of people, the company’s quarterly profits and cash flow earnings was admirable and even more people still refused to sell their shares even when rumors of bankruptcy of the company started being aired. Later discovery was that the CFO was misrepresenting the accounting records without people realizing and this was even worse on the last five quarters before