The WorldCom fraud is one of the largest scandals in the U. WorldCom's top-level managers violated the GAAP by capitalizing operating expenses and overstated their earnings by $11 billion; which resulted in losses worth $30 billion for investors and 30,000 employees lost their jobs. The WorldCom financial fraud had a permanent effect on the lives of its stakeholders and is a perfect example of how accounting firms are paying for their shortsighted strategies to earn a profit.
The stakeholders in the WorldCom case are as follows:.
a) Bernie Ebbers: Chief Executive Officer .
b) Scott Sullivan: Chief Financial Officer .
c) David Myers: Controller .
d) Buford Yates: Director of Accounting .
e) Cynthia Cooper: Vice-President of Internal Accounting .
f) Betty Vinson: Former Director of Corporate Reporting .
g) WorldCom's Audit committee and Board of Directors.
h) Securities and Exchange Commission (SEC).
i) Arthur Anderson (Former Auditors).
j) KPMG (Current Auditors).
k) Investors and employees.
l) Banks and Insurance companies.
Initially, Bernie Ebbers, Scott Sullivan, and David Myers constantly pressurized Betty Vinson to prepare fraudulent statements and assured her that they would take full responsibility for her actions. Betty Vinson did not blow a whistle against the top management and justified her self-interest through rationalizing that she was the only breadwinner in her family. Also, being an accountant by profession Betty Vinson knew various ways to inflate the financial accounts and continued to do so by her own free will. Betty Vinson was morally responsible for cooking the books and convicted for securities fraud. She was sentenced to five months in prison and five months house arrest.
Additionally, Bernie Ebbers, Scott Sullivan and David Myers who were pressurized by the Board of Directors to maintain a certain expense/revenue ratio justified their wrongdoing by adopting the Utilitarianism approach, which is that the consequences will benefit most stakeholders.
