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Essay / Worldcom accounting scandal - 1228
It was noticed that during the WorldCom accounting scandal, journal entries in the amount of $150 million and $771 million, respectively, were made by two employees of general accounting – Dan Renfroe and Angela Walter—without detailed support. Although this is not unusual at WorldCom, it is not a correct accounting practice because it goes against the basic principles of bookkeeping and accounting. Indeed, detailed support in the form of documentation is the key element in providing support for a journal entry and explains the reason or purpose for which the journal entry was created in the first place. Such support is very important and relevant from the perspective of those reviewing the journal entry and those who intend to endorse the journal entry. Above all, it is extremely relevant and essential from the point of view of the company's or company's external auditors. Thus, such support or related documentation enables the reviewer or approver to evaluate and recognize the completeness, reasonableness, accuracy and appropriateness of the journal entry.2. The company released $150 million in accruals to the wireless division over Deloris DiCicco's objections, without any proper support for entry. Since there was no proper justification, it is unclear whether the accruals were released with or without an analysis to determine whether the company had excess accruals in its accounts. In other words, it is unclear whether there was a solid basis for reducing line costs. Furthermore, these regularizations were not released during the period in which they were identified, but rather during the period in which they were deemed necessary by management. Additionally, these line costs were reduced by transferring $1 to the middle of the paper. ......relying only on operational audits and completely avoiding financial audits. Under the pretext of saving money, it has clearly avoided any function that could duplicate the role of external auditors. She carried out various “special projects” assigned to her by Mr. Sullivan; and such projects were purely operational in nature and had no audit objectives. ?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175822892635&blobheader=application%2Fpdf3.http://www.ifrs.org/Home.htm4.http://fl1.findlaw.com/news.findlaw.com/wsj/docs/worldcom /bdspcomm60903rpt.pdfLynne, W. Jeter, (2003). Disconnected: Deception and Betrayal on WorldCom.Wiley. 272 pages. Swanson, D., (2010). Internal audit: raising the bar. IT governance. 301 pages.