A brief discussion of the issues of ethics in accounting relating to the Worldcom scandal.
This paper reviews an article on the WorldCom scandal, and discusses how this article relates to 7-Eleven Inc. Also, based on the article, the paper discusses recommendations for improving accounting procedures at 7-Eleven, and explains the importance of ethics in accounting.
“An article written by William Thomas and Thomas Morris discusses the Enron and WorlCom accounting scandals. In April of 2002, internal auditors discovered a $9 billion fraud. Unlike Enron, WorlCom has improperly reported capitalized expenses (Thomas and Morris). This was the largest amount of accounting fraud in U.S. history. Former CFO Scott Sullivan, who was the “chief architect of the fraud”, pleads innocent to the original charges. Arthur Andersen was the accounting firm that was involved in both of these accounting scandals. This indiscretion caused the stock market to plummet, and many people lost thousands of dollars. Executives profited from this accounting fraud. The revelation of accounting fraud sent shockwaves through the investment community. Thousands of people lost much of their lives’ savings in these accounting scandals. The devastation of this fraud caused President Bush to take a tough stance on corporate fraud.”