WorldCom

A U.S. *multinational telecommunications corporation that filed for Chapter 11 bankruptcy reorganization in 2002. The importance of WorldCom in the history of auditing arose not only from the magnitude of the corporation’s accounting scandal that led to adjustments of more than $7 billion to its *financial statements. It was also the timing of events - the WorldCom scandal broke as the business and auditing worlds were still reeling from the aftershocks of the *Enron affair. (WorldCom and Enron shared the same external auditing firm, *Arthur Andersen.) Among mechanisms used to boost its *earnings, WorldCom had *capitalized billions of dollars of *operating expenses and exploited the use of *cookie jar reserves. Essentially, the corporation appears to have overstretched itself through a series of poorly integrated *acquisitions, and it tried to meet market expectations by *cooking the books. Some sections of the media started to use the term "WorldCon" (Jeter, 2003, 176). Tenacious internal auditor *Cynthia Cooper played a key role in uncovering the accounting *fraud, and she was nominated by Time magazine as one of its "Persons of the Year 2002." Her role in the WorldCom affair brought the importance of internal auditing to public attention. Further reading: Jeter (2003); Piper (2003); Toffler and Reingold (2003)