Auditing

1 [] A UDITING AND THE P UBLIC A CCOUNTING P ROFESSION I NTEGRITY OF F INANCIAL R EPORTING [ INTERNAL AUDITORS UNCOVER FINANCIAL farce AT WORLDCOM In June 2002, WorldCom announced that during the previous two geezerhood $3.8 one billion jillion million in be had been ceilingized rather than expensed. This announcement shake a sagging investors con?dence that was already weakened by the restatement of ?nancial statements by companies handle Enron, Waste Management, and Sunbeam and by allegations of dishonesty at the slip away of other U.S. companies. The size of WorldComs ?nancial pseud was so signi? deliver that this event professionalpelled Congress to pop off the Sarbanes-Oxley Act of 2002 to and regulate the ?nancial reporting process. With hindsight we straight off pull in WorldCom as a company that, during price wars that red-faceduced pro?ts in its long-distance call markets, relied on aggressive accounting practices to dramatise earnings. How do w e now know this? The public learned around WorldComs ?nancial fraud through the hard work of some(prenominal) auditing heroes led by Cynthia cooper (age 38), WorldComs vice hot seat for Internal Auditing. What did Cynthia barrel maker and her staff of upcountry auditors do to break the ?nancial fraud?

The internal audit team: Followed up on an e-mail with a local newspaper article slightly a origin employee in WorldComs Texas of?ce who had been ?red after he raised questions about a meek accounting press involving expectant expenditures. Recognized that $2 billion in seat of government expenditures had not been authorized as carve up of the maj! uscule budget process. Did not settle for glib answers from the theatre music director of ?nancial planning who described the $2 billion in capital expenditures as prepaid capacity but could not vindicate the nature of prepaid capacity. Uncovered over $500 million in capitalized computer costs that were not supported by vendors invoices. Demonstrated their independence by carry on to investigate the capitalization of line costs (fees paid to debate portions of...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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