World Com Case

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BAC 3654 Tutorial 2 - Discussion of questions and case: WorldCom: The Final Analyst Question Why might ethical corporate behavior lead to higher profitability? Answer: * Because attention to ethical concerns can keep corporations out of costly problems such as clean-up of pollution problems, fines, low morale. * Loss of reputation and stakeholder support. * It can open up profitable opportunities such as developing green product lines. Question Why should a professional accountant be aware of the Ethics Code of the International Federation of Accountants (IFAC)? Answer: * Because the IFAC Code is the newly defined standard to which all IFAC members including the AICPA, CICA and ICAEW, IMA and SMAC* have pledged to harmonize their Codes to during the next 5 years. * The IFAC Code contains the common elements to which all professional accountants will adhere. *(SMAC….. Social Mobile Analytics and Cloud (SMAC) technology) 2. ------------------------------------------------- WorldCom: The Final Catalyst What this case has to offer * When WorldCom announced massive overstatements of profit in June 2002, it completely shattered the trust in corporate accountability and governance that President Bush and others had been trying to rebuild. * The Sarbanes-Oxley Act emerged in late July 2002, triggering a change in corporate accountability and governance, and well as the accounting profession. * The WorldCom case involves simple manipulations, but once again offers lessons about the need for * an ethical corporate culture, * whistle-blower protection, * over-dominant CEO, * no independent Chair of the Board, and * incompetence of Directors. Discussion of ethical issues 1. Describe the mechanisms that WorldCom’s management used to transfer profit from
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