Question

Discuss the following topics for the WorldCom scandal:

1. Discuss Cynthia Cooper’s role in uncovering the accounting fraud.

2. Identify what Arthur Anderson’s role in the scandal.

3. Identify at least three specific Canadian quality control standards that in your opinion would have affected the outcome had they existed at the time of the scandal. Explain your reason why they would have had an impact.

4. Identify at least three Rules of Professional Conduct that have been violated as a result of this scandal? Explain the nature of each violation.

5. Identify at least two independence threats for Anderson and explain your why they were threats to Anderson’s independence.

6. If you were a shareholder of WorldCom at the time, would you have pursued legal action against the auditor? Assuming your answer is yes, under which law or laws would you sue and why?

Answer 1

Cynthia Cooper led the team that unearthed the fraud so she played arguably the most important role there. The leads she generated were even turned down by the external auditor who she reported to in effect.

She displayed exemplary professional skepticism and is the quintessential case of Corporate Whistle blowing.

Despite being pushed by the CFO to lay away from the audit, she managed to pursue her instincts, its said she worked discreetly at night with her team and that's what helped her uncover the biggest corporate fraud of America of the time.

Hope that helped! :)