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Corporate Event

WorldCom Accounting Scandal

Also Known As WorldCom scandal
Corporate Fraud and Financial Scandals

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. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/

Facts
Event Type
Accounting scandal 1
Event Year
2002 1
Connections

Associated With

Accounting, Practice Disciplines

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.

Source Wikipedia, WorldCom
Bernard Ebbers, Founders, Executives and Management Thinkers
Source Wikipedia, Bernard Ebbers
Telecommunications Industry, Industries
Source Wikipedia, WorldCom
WorldCom, Companies and Brands

The company whose 2000-2002 accounting fraud this event names.

Companies Involved

WorldCom, Companies and Brands
Source Wikipedia, WorldCom
Sources
1. Wikipedia, MCI Inc.
WikipediaHistory section
Quote, 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.
View the Source
Wikipedia, WorldCom
Wikipedia
  • 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.
  • Companies Involved: WorldCom
View the Source
Wikipedia, Bernard Ebbers
WikipediaAssociated With: Bernard Ebbers, Accounting scandal section
Quote, 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.
View the Source
Frequently Asked Questions

How large was the WorldCom accounting fraud?

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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