Fraud in the AIS Essay Example | Topics and Well Written Essays - 2500 words

baloney in the AIS - Essay ExampleThe risks and threats are clearly seen in the case of WorldCom (Beltran, 2002).WorldCom was a telecommunication conjunction founded in the division 1983. The company became so successful to the point where its stock price went up the peak, do the CEO, Bernard Ebbers, one of the richest men in the United States. The company continued with its expansion strategies by acquiring more(prenominal) companies. It was seen as one of the success stories in the business world in the 1990s (Fernando, 2009).In the year 2002, the company announced that it had used an improper method of accounting method that resulted to an over affirmation in earnings in 2001and during the first quarter of the year 2002 by more than $3.8 billion. As a result, in 2002 the company filed for Chapter 11 bankruptcy, which was the largest filing in the history of the United States. It has $41 billion debt load and $107 billion in assets, fashioning the bankruptcy even larger than that of Enron Corporation. The company had to lay off about a fifth of its employees in an effort to stay in business.Investigations showed that the accounting maneuver was exposed by the internal auditor in WorldCom. One of the main discoveries was on the companys revenue expenditure that had been treated as great(p) expenditure. It resulted to an overstatement of the profits by $3.8 billion. As a result, the companys external auditors, Arthur Andersen LLP released a statement stating that it acted according to the professional standards and that the internal audit could not be relied on in relations to the accounting manipulations. Arthur Anderson had acted in collusion with top management at WorldCom to falsify the companys profits with the lease of increasing its stocks. The companys audit committee, in turn, replaced Arthur Andersen LLP with KPMG to further investigate the matter.