Sullivan said something about don't jump out of the plane. Instructions Answer the following questions. He was a manager in the corporate reporting department and is one of five individuals who pleaded guilty. That after the preliminary statements were issued, with the exception of any normal transaction, valid transaction, we wouldn't be asked to be recording any more late entries. I informed him that I didn't believe the entry we were being asked to do was right, that I was scared,and I didn't want to put myself in a position of going to jail for him or the company. Among the major scandals was Worldcom Company. Did anyone ever ask you to do that? Did anything else happen during the meeting? Other than that, falling telecommunications companies and new entrants were drastically reducing their prices leads WorldCom.
And he mentioned that he had a discussion with Bernie Ebbers asking Bernie to reduce projections going forward and Bernie had refused. Solution Ans A Here It happens to be Fundamental ethical issues, whereincompany should be running its business with utmost integrity andclarity. Financial reporting is a broader concept; it includes the basic financial statements and any other means of communicating financial and economic data to interested external parties. In 1993, the company acquires long distance providers in the name of Resurgence Communications Group and Metromedia communications. Line costs are what WorldCom was paying other companies to use their networks.
And he mentioned that he had a discussion with Bernie Ebbers asking Bernie to reduce projections going forward and that Bernie had refused. To mask the decline in earning and ensure the company was portrayed as a growing profitable company, used fraudulent accounting methods. The decision may be easier because there is no comprehensive ethical system to provide guidelines. Did he ask you to conduct any analysis to determine whether the line cost numbers were accurate? The collapse of WorldCom did not just affect their employees, retailers, the government but also bankers. Normand, you said that Mr. Did anything else happen during themeeting? Ebbers was indicted on federal charges in the accounting scandal.
Sullivan said something about the line cost numbers not being accurate. Employees were encouraged to fall in, not questioning decisions made by upper management providing no outlet for creativity or criticism. Normand, if you could just describe for the jury how the meeting started and what was said during the meeting? He is testifying in hopes of receiving no prison time when he is ultimately sentenced. The failure of WorldCom was due to the bad decisions of its executives to manipulate earnings with improper accounting entries. Financial Reporting Pressures Presented below is abbreviated testimony from Troy Normand in the WorldCom case. During this meeting, did Mr.
In your response,please discuss how the major stakeholders would be affected by thealternative courses of action suggested in c above. He was a manager in the corporate reporting department and is one of five individuals who pleaded guilty. Instead, the Board plans to allow only a brief review by selected parties, limited to issues of operationality and clarity, and would exclude questions as to the merits of the proposed approach. What did you understand him to mean when he said that? I left his officenot convinced in any way that what we were asked to do was right. Q: What did you understand that to mean, the numbers would be the numbers? The behaviors displayed by employees and top management executives demonstrated that a culture of corruption was tools to cultivate organizational behavior were implemented. In July 2002, WorldCom filed for Chapter 11 bankruptcy protection, the largest bankruptcy in U. He did say he believed that the initial statements that we produced, that the line costs in those statements could not have been as high as they were, that he believes something was wrong and there was no way that the costs were that high.
When the financial vice president determines that early implementation of the rule will adversely affect the reported net income for the year, he discourages Weller from implementing the rule until it is required. I believe you testified that Mr. Also, the accountants Bufford Yates, David Meyers and Troy Normand were all involved in this event. The postscript also will relate subsequent important events in the telecommunications industry, the effect of WorldCom's problems on its competitors and labor market, and the impact WorldCom had on the lives of the key players associated with the fraud and its exposure. Had the company insisted the procedures be recorded in such a manner, I would have no choice but to alert the necessary authorities as this was a serious violation of accounting ethics.
How did you feel after this meeting? However, I did question myself to some degree after talking with him wondering whether I was making something more out of what was really there. Sullivan say anything about whether you would be asked to make entries like this in the future? During this meeting, did Mr. Presented below is abbreviated testimony from Troy Normand inthe WorldCom case. As the accountant for WorldCom, I would have recorded such disbursements as operating costs; the procedure used was unethical. Normand, you said that Mr. The fraud committed at WorldCom is an enigma in itself; internal auditors had a great deal of struggles to overcome.
Words: 557 - Pages: 3. Financial Reporting Pressures Presented below is abbreviated testimony from Troy Normand in the WorldCom case. Neither you, nor the coeditors you shared it with will be able to recover it again. Authur Anderson also missed opportunities where he could have disclosed the fraud. In what ways was it felt that the pronouncements issued by the Financial Accounting Standards Board would carry greater weight than the opinions issued by the Accounting Principles Board? Grab a parachute and bail if results were unsatisfactory. Q: Did you ever conduct any such analysis? Did you ever conduct any such analysis? Did you ever conduct any such analysis? Sullivan ever provide any accounting justification for the entry you were asked to make? What did you understand that to be mean, the numbers would be the numbers? The company went public in 1989 and merged with Advantage Companies, Inc. And he mentioned that he had a discussion with Bernie Ebbers, asking Bernie to reduce projections going forward and that Bernie had refused.
Scott Sullivan- Chief Financial Officer at the time Cynthia Cooper- auditor who found the misclassified costs David Myers- Company's controller at the time Questions? It had a profound effect on an entire industry. Did anyone ever ask you to do that? He testified in the hope of receiving no prison time when he was ultimately sentenced. What did you understand him to mean when he said that? The company had no written policies or corporate code of conduct, with different divisions following different rules and policies. Normand, you said that Mr. He was a manager in the corporate reporting department and is one of five individuals who pleaded guilty. Did he ask you to conduct any analysis to determine whether the line cost numbers were accurate? I think yes because: -He felt he was not recording correctly -He continued to do it anyway Question C What would you do if you were Troy Normand? Q: How did you feel after this meeting? What did you understand him to mean when he said that? Yes, he made a comment that from that point going forward we wouldn't be asked to record any entries, high-level late adjustments, that the numbers would be the numbers.
He mentioned that he acknowledged that the company had lost focus quite a bit due to the preparations for the Sprint merger, and that he was putting plans in place and projects in place to try to determine where the problems were, why the costs were so high. This made history as the fourth largest long distance communication firm in United States. He said that he respected our concerns but that we weren't being asked to do anything that he believed was wrong. Sullivan saidsomething about don't jump out of the plane. He is testifying in hopes of receiving no prison time when he is ultimately sentenced. He was a manager in the corporate reporting department and is one of five individuals who pleaded guilty.