WorldCom Fraud

In doing some research recently, I came across this information:

Ten years ago Prosecutors indicted WorldCom's former chief financial officer, Scott Sullivan, and Buford Yates Jr., WorldCom's former director of general accounting. (Sullivan, accused of overseeing a long-running conspiracy to hide operating expenses in order to boost WorldCom's earnings, later admitted guilt and was sentenced to five years in prison. Yates later pleaded guilty to securities fraud and conspiracy and agreed to help prosecutors; he was sentenced to one year and one day in prison.)

 

The WorldCom case was a classic example of financial statement fraud. WorldCom capitalized costs that should have been expensed, thus inflating profits in the short time. They also recorded fictitious revenues to achieve the same goal.

Although not all frauds involve such large, well known companies, cases like WorldCom serve as an urgent reminder that all organizations need to be proactive. If you would like to learn more about the WorldCom fraud and related topics, I invite you to contact me via email (contact@emgfraudconsulting.co.uk).