WorldCom Notes

Topics: Auditing, Financial audit, Internal audit Pages: 4 (1027 words) Published: March 17, 2014
[1] What business was WorldCom in?
WorldCom was in the business of telecommunications.
Where was WorldCom located?
WorldCom was located in Clinton, Mississippi.
Who was the CEO?
The CEO was Bernie Ebbers.
Who was the CFO?
The CFO was Scott Sullivan.
What are the names of the two members of the internal audit staff who worked with Cynthia on their secret investigation? Gene Morse and Glyn Smith What made the internal auditors think that possibly there was a need to investigate WorldCom’s accounting? The internal auditors thought that there may be a need to investigate with WorldCom’s accounting stemmed from an unjustified $400M reserve reversal which bumped revenue. When the inquiry was made as to the justification for this reversal, Anderson provided no explanation except that it was “fine”. Cooper was then received a hostile response from the CFO when she further questioned it. This one-sided hostility caused Cooper to become suspicious. Which CPA firm was the external auditor of WorldCom?

Arthur Anderson was the external auditor of WorldCom.

[2] At the time Cynthia Cooper discovered the accounting fraud, WorldCom did not have a whistleblower hotline process in place. Instead, Cynthia took on significant risks when she went over Scott Sullivan’s head and notified the Chairman of the Audit Committee of her findings. Conduct an Internet search to locate a copy of the Sarbanes−Oxley Act of 2002. Summarize the requirements of Section 301.4 of the Act.

In summary, Section 301.4 of the Act requires an audit committee to establish a method for individuals to anonymously submit their complaints or concerns, and a process with which to handle them. Specifically, the Act states that (A) each audit committee shall establish procedures for the receipt, retention and treatment of complaints received by the issuer regarding accounting, internal accounting controls, or auditing matters; and (B) the confidential, anonymous submission by employees...
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