WorldCom Fraud

WorldCom Fraud.
When talking about fraud, first thing comes to mind is the business ethics in the accounting fields. People often think accounting fraud is caused by those ones with low moral standards, and its driven by the temptation of money. The fraud triangle covers three factors that directly associated with the fraud crime – opportunity, rationalization, and financial pressures. In the WorldCom Fraud accounting scandal, the accountant Betty Vinson is one of the key culprits even though she said she was pressured by her superiors. Objectively, her case perfectly demonstrated how the three factors of the fraud triangle lead to this crime.
Firstly, she received financial pressure from her superiors with conditionals and protective incentives to cover their dirty works, which also provided her opportunities to commit fraud with a convective low risk of getting caught. Under the conditions above, by the time past by without them being caught, she justifies the fraud and ignored the nature of the crime. However, justice disapproved her illusionary rationalizations because the WorldCom fraud scandal finally exposed to the public; and Betty Vinson ended up in prison.
If we look back at the WorldCom case to analysis if the company had a chance to built a strong ethical culture with the factors of sustainability, social responsibility, and alignment to avoid the scandal, the answer is yes. A health and strong ethical culture require strong leaders who respect the company’s true business value, strategically alliance with external stakeholders while listening to the needs of its employees when making important decisions.

As for WorldCom, to prevent the fraud mechanism in the company, they could have had an independent department for financial report examinations and occasional inspections, while also open the reports to the public for the public oversights. In this way, it decreases the chance of Betty twists the reports by exposing her reports to other professionals while also increases the company’s social responsibility. From a financial perspective, random inspections and public oversights also at a lower cost compared to full authorized inspections.
Moreover, since Betty Vinson was pressured to commit the crime, it is not hard to imagine that the majority of her accomplice was also under similar peer pressures to ignore the ethics code and violating the laws. On the contrast, if the leads of the company could have enforced the honest and sense of responsibility along with other ethical standards to all other parties – employees, partners, clients, stakeholders and the community – this company would also achieve sustainability, which is the highest level of an ethical organization. Under this organization culture, Betty Vinson would not fall into the fraud triangle; and the WorldCom scandal could have been avoided.

WorldCom Fraud

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