Question

1. What factors in the WorldCom case support the conclusion that CEO Bernie Ebbers knew about the financial statement fraud? What factors support his defense that he did not know about the fraud? Briefly explain your answer.

2. Compare and contrast the degree of moral courage exhibited by internal auditors Cynthia Cooper at WorldCom and Deidre DenDanto at Sunbeam. Briefly explain your answer.

Answer 1

1. Bernie Ebbers Knew about the financial statement fraud because he was the one who encourage others to go into financial fraud because of the stock prices were going down, which was affecting his marginal loan. For that reason, he was trying to sell his stock, but the board of Directors lent him $341 million, along with 2% interest rate. On the other hand, as he never sold his WorldCom stock, which was a showed that he was unaware of the fraud of financial statements and accurate position of WorldCom.