Fraudulent Accounting and the Downfall of WorldCom
WEBAug 11, 2021 · Under the made-up term “prepaid capacity,” company accountants were instructed to book certain costs, such as the leases of network lines, as capital expenses, instead of as operating expenses.
WorldCom scandal - Wikipedia
WEBShe first asked Kenny Avery, who had been Andersen's lead partner on the WorldCom account before KPMG took over, if he knew about prepaid capacity. Avery had never heard of the term, and knew of nothing in Generally Accepted Accounting Principles (GAAP) that allowed for capitalizing line costs.
The WorldCom Fraud Under A COSO Magnifier - Fraud Magazine
WEBThe scheme lowered line costs (the company’s largest single expense) by capitalizing them as “prepaid capacity” and reversing allowances without sufficient justification.
The Rise and Fall of WorldCom: Story of a Scandal - Investopedia
WEBJun 14, 2024 · The company's capital expenditures, which another employee questioned and was fired over. Complicated accounting terms (such as prepaid capacity), which were used to hide the movement of...
Complaint: SEC v. WorldCom, Inc.
WEBBy improperly reducing reserves held against "line costs" and by transferring certain "line costs" to its capital asset accounts, WorldCom falsely portrayed itself as a profitable business when it was not, and concealed large losses WorldCom suffered.
Extraordinary Circumstances - Fraud Magazine
WEBScores of dot-com, Web hosting, and new telecom companies went bankrupt and canceled orders for fiber-optic capacity with the large carriers like WorldCom, AT&T, and Sprint. Telecom carriers and suppliers fell like a circle of dominoes. Hundreds of thousands of telecom workers lost jobs.
WEBcapital expenditure accounts to make WorldCom appear more profitable. After asking the director of financial planning about the issue, Cooper was told that the adjustment involved “prepaid capacity,” a term Cooper and her team were not familiar with.
Extraordinary Circumstances: The Journey of a Corporate …
WEBCynthia Cooper was a true corporate whistleblower. She became famous, not by choice, but because of the WorldCom financial statement fraud valued at $11 billion.
In re Worldcom, Inc. Securities Litigation - Casetext
WEBDec 15, 2004 · After asking questions of several people about "prepaid capacity," Eugene Morse, a member of WorldCom's internal audit group, used a new software tool to investigate WorldCom's books and was able to uncover the transfer of line costs to capital accounts in a matter of hours.
Complaint: Betty L. Vinson, and Troy M. Normand - SEC.gov
WEBIn particular, in or about April 2002, NORMAND again called the DPA and again instructed him to adjust the PP&E Roll-Forward by increasing certain capital accounts for "prepaid capacity." NORMAND advised the DPA that these entries had been ordered by WorldCom's senior management.
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