Worldcom-Accounting-Fraud-世通财务造假案例分析

WorldComOverviewNatureofAccountingFraudProblems(InternalandExternal)FallofWorldComandlessonsfromitEthicalchoicesStartedin1983asLDDSBernieEbbersJoinedin1985AcquisitionofMFSof1996AcquisitionofMCIin1997($42billion,thelargesttakeoverinUS)FailinacquisitionofSprintin2000Dotcombubbleburstin2000WorldComLoansEbbers$400M(2000-2002)Accountingfrauduncoveredin2002EmergedasMCIfrombankruptcyin2004FinancialHighlights1995199920012004Revenues($billion)$2.2$37.1$35.2$20.7Totalassets($billion)$3.4$91.1$103.9$17.1Employees(in000)7.597.687.840.4Marketcapital($billion)$3.3$150.5$42.8$6.4Debt($billion)$0.8$13.1$30.0$5.9Totalcapitalization($billion)$4.1$163.6$72.8$12.3FinancialstatementsWorldComOverviewNatureofAccountingFraudProblems(InternalandExternal)FallofWorldComandlessonsfromitEthicalchoicesDefinition:Accountingfraudistheintentionalmisrepresentationoffinancialstatementsinordertoobtainwrongfullyanadvantage,retainabenefit,oravoidadetrimentPressureto“cookthebook”a)Thegrowingpaceofincomeisgenerallyslowingdownb)Drivenbyinterests(politicalinterestlikepersonalfameandimageinthepublic,economicalinterest)Typicalmethodsto“cookthebook”a)CostofassetsInventoryisnotrealFixedassetisfakea)UnrealliabilitiesAccountspayablesisovervaluedAccruedexpensesarenotreala)InflatedincomeDifferencebetweenearningsmoothingandaccountingfraud•Consistency•Matching•Conservatism•choosingofaccountingitemWhatdidWorldComdo:a)Accountingfraudintwomethod:improperreleaseofaccrualsimpropercapitalizationofoperatingexpenseWorldComOverviewNatureofAccountingFraudProblems(InternalandExternal)FallofWorldComandlessonsfromitEthicalchoicesLossofstrategicdirectionCorporatecultureOrganizationalstructureBoardofdirectorsFailuretoacquireSprintThepoorperformanceemployeesshouldnotquestiontheirsuperiorsthereisnowrittenpolicies.EachdepartmenthaditsownruleslegalfunctionwaslessinfluentialandlesswelcomethaninahealthycorporateenvironmentThecorporategovernancestructureissocomplicatedInformationisnotconsolidated50%ofnonexecutivemembersNoregularcommunicationDecisionsnotbasedontheinterestofshareholders,butpersonalinterests.ExternalAuditorEconomicaldownturnWeakgovernmentregulationFormerlybigfiveFastgrowingsalesrevenueTestinginformationaccuracyratherthancomparabletestsChangedtheratingfromhighriskaccordingtosoftwaretomoderateriskNASDAQstockpricefrom1994to2008WorldComOverviewNatureofAccountingFraudProblems(InternalandExternal)FallofWorldComandlessonsfromitEthicalchoicesImpactoftheaccountingfraudForShareholders•$180billiondollarlossofsharestockvaluePreferredStockOwner•$37.8billionofdebtandprofferedstockholderlossCompanyandemployees•$750millionpunishfromSEC•57000employeeslostjobs•Allcurrentandformeremployeeslostretirementsavings(inWorldComStock)WhathappenedonseniormanagementEbbers-CEO25yearsinprisonSullivan-CFO5yearsinprisonMyers-controller1yearinprisonYates-DirofAcctg1yearinprisonVinson-AcctgDept5monthsinprisonManager5monthshousearrestNormand-AcctgDept3probationManagerBoardofdirector12directoragreedtopayatotalof$25mtosettlesecuritiesclassactioncaseInvestmentBankers:settlementofsecurityclassactionCitiGroup$2.6billionJPMorgan$2.0BOther$1.4BGrubmanandSolomanBrotherSecuritiesAnalystfined$15Mandbannedforlifefrompractice.AccountingSystemProblem:Eachdepartmenthaditsownrulesandmanagementstyle.Nobodywasonthesamepage.Solution:Buildfair,clearandintegratedaccountingsystem.Ensureaccurate,reliableaccountingrecords.AccountingSystemProblem:employeesshouldnotquestiontheirsupervisorSolution:Reducemanagement’sintervenetothenormaldailyrecording.AuditingSystemProblem:BettyVinson,SeniormanagerofGeneralAccounting,followedsupervisor’sillegalinstructionofrecordentryalthoughherprofessionaljudgmenttellherthatiswrong.Solution:Builduptheproperauditingsystemthatallowswhistleblowinginternally.AuditingSystemProblem:[Internal]CynthiaCooper,HeadofInternalAuditdepartment.Foundtheaccountingissuesbutwasn’tallowedtocheckindepth.Solution:Enforcethepowerofinternalauditingdepartment.AuditingSystemProblem:[External]Conflictof“satisfying”customersandauditingethicsSolution:SECregulationonexternalauditingfirmsandindustryselfregulationrules.WorldComOverviewNatureofAccountingFraudProblems(InternalandExternal)FallofWorldComandlessonsfromitEthicalchoicesSupposeyouwere:AmotherfortwokidsInmid40Pursuingpromotion……WhatyouwoulddoifyouwereBettyVinson?AsBettyVinson,youcouldhave:TalktointernalauditingdepartmentandprovidetheinformationButbeforeyoublowthewhistle,alwaysremembertoprotectyourselfby:Savingtherelevantevidenceidentifythesourcesofsupport……Alwaysremember:Nojobsisworthbreakingthelawsorcommittingunethicalactions.Yourpersonalintegrityisyourmostimportantasset-youownitandcontrolit!