The following factors in the WorldCom case support the conclusion that CEO Bernie Ebbers knew about the financial statement fraud: • Mr. Ebbers' wealth was tied to the price of WorldCom stock. He had considerably leveraged his wealth by taking large margin loans against the value of his WorldCom stock. As the price of the WorldCom stock declined, the amount of the loans needed to be reduced. The margin call on these loans and the accompanying decrease in personal financial wealth provided the perceived pressure to commit the financial statement fraud. • Mr. Ebbers was the CEO and on the Board of Directors of WorldCom. He was in charge of the everyday management of WorldCom. In addition, Bernie Ebbers was the primary representative to the public …show more content…
Ebbers never sold his WorldCom stock. • As indicated in the video we watched in class, Mr. Ebbers was a simple fellow who had a Bachelor's Degree in Physical Education and did not understand the technology WorldCom was selling. He likely relied heavily on the education and experience of CFO Scott Sullivan to prepare WorldCom's financial statements. I think Cynthia Cooper was the most responsible for the fraud being uncovered. Kim Emigh, WolrdCom Financial Analyst, stood up to his manager regarding the overcharging and kickback schemes and was fired. Mark Abide, WorldCom Director of Property Accounting, stood up to his manager regarding making fraudulent entries. Mr. Abide notified Glyn Smith, WorldCom Director of Internal Auditor, and Ms. Smith forwarded the email to Cynthia Cooper, WorldCom Vice President of Internal Audit. All of these individuals were involved in the chain that led to the discovery of the financial fraud, but Ms. Cooper showed repeated moral courage in the face of adversity. She showed moral courage by ignoring the controller who told her she was wasting her time. She showed moral courage by ignoring Scott Sullivan when he threatened to hold all promotions in the internal audit department. She showed moral courage by going to Arthur Andersen with her findings. When Sullivan became aggressive and hostile, reprimanding her for discussing her findings with Arthur Andersen, she again showed moral courage by reviewing Arthur Andersen's workpapers and presenting her findings to the audit