What went wrong with WorldCom?
Who were the people responsible? Could it have been avoided? What are the major challenges before the company now and what should be done to recover from the organisational disaster? The case for automated controls in-house Prashanth V Boccasam It was one of the biggest scandals in corporate history. Over 2001 and early 2002, giant telecom firm WorldCom Inc. inflated its earnings by a whopping $3.8 billion, turning five moneylosing quarters into allegedly profitable ones. The scandal was driven by WorldCom Inc. CFO Scott Sullivan, who, by treating ordinary expenses as capital expenses, made the struggling telecom giant look as though it was making money. In 2002, the company’s internal audit department discovered the scheme, eventually restating the company’s earnings to reflect the deep losses WorldCom had actually suffered during those five quarters. Later that year, WorldCom was forced to file for bankruptcy protection. This case raises many troubling questions. How could such a lar
