Fraud Essay

409 WordsJun 3, 20152 Pages
WorldCom fraud case WorldCom was Telecommunication Company found during 1983 in Jackson, Mississippi. The auditing process was done by Arthur Andersen auditing firm when Cooper, the vice president of the Internal Audit found a 2001 capital expenditures audit resulted in a large difference because of entries to an account called “prepaid capacity”. This creates a doubt to Cooper and she starts her investigation and uncovered a $3.8 billion in fraud in 25 June, 2002. However, Scott Sullivan, the chief financial officer of Arthur Anderson auditing firm was involved in the fraud. He was close and loyal to the CEO of WorldCom, Bernie Ebbers. As a result, Sullivan was fired from the firm and sentenced 5 years. Professional standards * General standards 1. Having adequate training: this standard was not followed. The personnel in the internal audit department were not enough and lacked the suitable training. 2. Independence in mental attitude: no references. 3. Due professional care: no references. * Standards of Field Work 1. The work is planned and supervised: this standard was not followed. The auditing process was not well planned; there was a weakness. However, when Cooper had a doubt, he began his investigation and supervision. 2. A sufficient understanding of internal control: this standard was not followed. Unfortunately, the internal control of WorldCom environment was inactive. In other words, WorldCom’s lack of a culture leads to dishonesty and lack of powerful internal control. 3. Sufficient and evidential matter is to be obtained: this standard was not followed. There were no authorizations. The journal entries were created with no documentations. In other words, internal auditors don’t have the full access over the financial statements. The department of internal auditing did not have full obtain or access to the financial

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