Corporate Events
WorldCom Accounting Scandal
Also Known As WorldCom scandal
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Between mid-1999 and May 2002, WorldCom executives used fraudulent accounting methods, including booking operating expenses as capital expenditures, to disguise the company's declining earnings. On July 21, 2002, the company filed for Chapter 11 bankruptcy protection, at the time the largest such filing in United States history, in what was found to be the largest accounting fraud yet uncovered in America, displacing the fraud at Enron less than a year earlier.
Facts
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WorldCom's 2002 disclosure that it had improperly capitalized billions of dollars in operating expenses is, alongside Enron, one of the two defining accounting-fraud cases that drove the Sarbanes-Oxley Act's overhaul of financial reporting.
The company whose 2000-2002 accounting fraud this event names.
Contains
Sources
1. Wikipedia, MCI Inc.
WikipediaHistory sectionQuote, History section
On July 21, 2002, WorldCom filed for Chapter 11 bankruptcy protection in the largest such filing in United States history at the time.
Wikipedia, WorldCom
WikipediaLead sectionQuote, Lead section
WorldCom grew largely by acquiring other telecommunications companies, including MCI Communications in 1998, and filed for bankruptcy in July 2002 after an accounting scandal, in which several executives were convicted of a scheme to inflate the company's assets.
Wikipedia, Bernard Ebbers
WikipediaAssociated With: Bernard Ebbers, Accounting scandal sectionQuote, Associated With: Bernard Ebbers, Accounting scandal section
Ebbers, CFO Scott Sullivan, controller David Myers and general accounting director Buford 'Buddy' Yates used fraudulent accounting methods to disguise WorldCom's decreasing earnings in order to maintain the company's stock price.
Frequently Asked Questions
11 billion dollars in misstated earnings.
WorldCom initially admitted to 3.9 billion dollars in accounting misstatements when the fraud broke in 2002; the figure eventually grew to 11 billion dollars, making it, at the time, the largest corporate accounting fraud in United States history.
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