Earnings smoothing or earnings management


Using the case below please help with these questions:

Accounting Fraud at WorldCom

By Robert . Kaplan and David Kiron

https://www.hbs.edu/faculty/Pages/item.aspx?num=31127

Problem 1. What are the pressures that lead executives and managers to "cook the books?"

Problem 2. What is the boundary between earnings smoothing or earnings management and fraudulent reporting?

Problem 3. Why were the actions taken by WorldCom managers not detected earlier? What processes or systems should be in place to prevent or detect quickly the types of actions that occurred in WorldCom?

Problem 4. Were the external auditors and board of directors blameworthy in this case? Why or why not?

Problem 5. Betty Vinson: victim or villain? Should criminal fraud charges have been brought against her? How should employees react when ordered by their employer to do something they do not believe in or feel uncomfortable doing?

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Other Management: Earnings smoothing or earnings management
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