Accounting Fraud at WorldCom

Accounting Fraud at WorldCom Description

The principal players in WorldCom's accounting fraud included CFO Scott Sullivan, the General Accounting and Internal Audit departments, external auditor Arthur Andersen, and the board of directors. The case provides sufficient detail to allow for a full discussion of the pressures that lead executives and managers to "cook the books," the boundary between earnings smoothing or management and fraudulent reporting, the role for internal control systems and internal audit to prevent or rapidly detect accounting fraud, the expectations about governance processes performed by external auditors and the board of directors, and the pressure and consequences when middle managers follow orders that they know are wrong. Written from the public record, the case contains numerous quotes from an individual involved in the WorldCom fraud that were reported by the Investigative Committee and Wall Street Journal articles about several of the individuals caught up in the situation.

Case Description Accounting Fraud at WorldCom

Strategic Managment Tools Used in Case Study Analysis of Accounting Fraud at WorldCom

STEP 1. Problem Identification in Accounting Fraud at WorldCom case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of Accounting Fraud at WorldCom case study

STEP 3. Industry Specific / Porter Five Forces Analysis of Accounting Fraud at WorldCom case study

STEP 4. Evaluating Alternatives / SWOT Analysis of Accounting Fraud at WorldCom case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis Accounting Fraud at WorldCom case study

STEP 6. Recommendations Accounting Fraud at WorldCom case study

STEP 7. Basis of Recommendations for Accounting Fraud at WorldCom case study

Case Analysis of Accounting Fraud at WorldCom

Accounting Fraud at WorldCom is a Harvard Business (HBR) Case Study on Strategy & Execution , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Accounting Fraud at WorldCom is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Accounting Fraud at WorldCom case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Accounting Fraud at WorldCom will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Accounting Fraud at WorldCom case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Strategy & Execution, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Accounting Fraud at WorldCom, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Accounting Fraud at WorldCom case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Strategy & Execution Solutions

In the Texas Business School, Accounting Fraud at WorldCom case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Accounting Fraud at WorldCom

Step 1 – Problem Identification of Accounting Fraud at WorldCom - Harvard Business School Case Study

The first step to solve HBR Accounting Fraud at WorldCom case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Fraud Accounting is facing right now. Even though the problem statement is essentially – “Strategy & Execution” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Fraud Accounting, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Accounting Fraud at WorldCom.

The external environment analysis of Accounting Fraud at WorldCom will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Accounting Fraud at WorldCom case study. PESTEL analysis of " Accounting Fraud at WorldCom" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Accounting Fraud at WorldCom macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Accounting Fraud at WorldCom

To do comprehensive PESTEL analysis of case study – Accounting Fraud at WorldCom , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Accounting Fraud at WorldCom

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on Accounting Fraud at WorldCom

Government policies have significant impact on the business environment of any country. The firm in “ Accounting Fraud at WorldCom ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Fraud Accounting is operating, firms are required to store customer data within the premises of the country. Fraud Accounting needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Accounting Fraud at WorldCom has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Fraud Accounting in case study Accounting Fraud at WorldCom" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Fraud Accounting in case study “ Accounting Fraud at WorldCom ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Fraud Accounting in case study “ Accounting Fraud at WorldCom ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on Accounting Fraud at WorldCom

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Accounting Fraud at WorldCom ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Fraud Accounting can compete against other competitors.

Government Scheme & Subsidies Impact on Accounting Fraud at WorldCom

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Accounting Fraud at WorldCom case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on Accounting Fraud at WorldCom

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Fraud Accounting needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Accounting Fraud at WorldCom

Social Factors that Impact Accounting Fraud at WorldCom

Technological Factors that Impact Accounting Fraud at WorldCom

Environmental Factors that Impact Accounting Fraud at WorldCom

Legal Factors that Impact Accounting Fraud at WorldCom

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Accounting Fraud at WorldCom case study. PESTEL analysis of " Accounting Fraud at WorldCom" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: Accounting Fraud at WorldCom case study solution