The Organizational Behavior of Walmart Company

Far600 Case Study Worldcom Essay Example

Far600 Case Study Worldcom Essay Example Far600 Case Study Worldcom Essay Far600 Case Study Worldcom Essay FAR600 CASE STUDY WORLDCOM QUESTION 1 a) Discuss the earnings management technique employed by the management of World Com. WorldCom admitted that the company had classified over $3. 8 billion in payments for line costs as capital expenditures rather than current expenses. Line costs are what WorldCom pays other companies for using their communications networks; they consist principally of access fees and transport charges for messages for WorldCom customers. Reportedly, $3. 055 billion was misclassified in 2001 and $797 million in the first quarter of 2002. According to the company, another $14. 7 billion in 2001 line costs was treated as a current expense. WorldCom’s accounting had been questioned before its June 25 admission. In March 2002, the SEC requested data from the firm about a range of financial reporting topics, including (1) disputed bills and sales commissions, (2) a 2000 charge against earnings related to wholesale customers, (3) accounting policies for mergers, (4) loans to the CEO, (5) integration of WorldCom’s computer systems with those of MCI, and (6) WorldCom’s tracking of Wall Street analysts’ earnings expectations. On July 1, 2002, WorldCom announced that it was also investigating possible irregularities in its reserve accounts. Companies establish these accounts to provide a cushion for predictable events, such as future tax liabilities, but they are not supposed to manipulate them to change reported earnings. On August 8th, WorldCom admitted that it had improperly used its reserves in recent years. The indictments issued August 28th charged that reserve accounts were reduced in order to provide credits against line expenses. ) In your opinion, why do managers of WorldCom want to manage their earnings and subsequently be engaged in fraudulent activities? In my opinion the main reason why the managers of WorldCom want to manage their earnings which then subsequent leads the to be engaged in fraudulent activities is mainly because the high expenses they have incurred that will then reflects a losses figure in WorldCom financial statements. Telecom analyst Tom Lauria had made estimation for the W orldCom losses in 2001 could reach up to $1. 5 billion. : In reality, it will implicates that WorldCom will lose their investors because of the huge amount of losses that had been incurred by WorldCom. In order to protect their investors or more importantly WorldCom company status, the managers decided to make an accounting moves that can reduced their expenses. This had been stated by the internal audit of WorldCom which indicates that they uncovered misdeeds that there were no accounting standards to support the expenses. It had been noted that WorldCom had inexplicably reduced one of WorldCom’s unit expenses by $33. million dollars and leads to a higher profit margin in WorldCom financial statements. Another reason that can be noted regarding why WorldCom want to manage their earnings which then leads to in fraudulent activities is because WorldCom wanted to make a tax evasion. This can been proved at Tyco International by the action of both CFO Mark Swartz and ousted CEO Dennis Kozlowski reportedly signed off on each of the score s of deals Tyco made since 1999. Main reason of the signed off on each of the scores is for tax evasion or to reduce the amount of tax to be paid to the IRR’s. Other than that both CFO Mark Swartz and ousted CEO Dennis Kozlowski used the earnings management to use the Tyco International money for their personal expenses. This issue had been provided by the evidence made by USA TODAY’s which had been published in their articles. Other reason why the managers of WorldCom want to manage their earnings which then subsequent leads to the engaged in fraudulent activities are the peer pressure made by the higher authority to increase WorldCom’s division profit margin. This issue had been posted in an article regarding an e-mail dated march5, 2001 which stated that Myers trefers to recent diner in which Sullivan and executives Tom Bosley discussed the need to â€Å"do whatever necessary to get Telco margins back in line†. It shows that the higher authority are pressuring their stuff to increase their profit margin which are currently declining at any means whether its uses appropriate accounting standards or not. c) What were the consequences that befell the company upon the discovery of the fraudulent activities? WorldCom stock had fallen from a high of $64. 50 a share in mid-1999 to less than $2 a share. The price fell below $1 a share immediately after the announcement and then to pennies a share upon news that there might be further accounting irregularities. While much and perhaps most of this decline might be attributed to the firm’s changing economic prospects, the accounting maneuver described above is likely to have hurt investors who continued to hold the shares or even bought more in anticipation of a rebound. WorldCom employees who hold the company’s stock in their retirement plans have also suffered losses. At the end of 2000, about 32%, or $642. 3 million, of WorldCom retirement funds were in company stock; those investment have fallen to less than 4%, or less than $18. 7 million, of the funds. WorldCom does not require employees to own company stock in their retirement plans, and they are permitted to sell the shares they do have. WorldCom stated that it would cut 17,000 of its 85,000 employees. The extent to which these dismissals would have occurred in the absence of the firm’s accounting problems is not clear. QUESTION 2 Discuss in what instance is earnings management acceptable and in what instances is it not acceptable? QUESTION 3 In your opinion, what are the strategies that the accounting profession can take to curb the abuses in earnings management that subsequently result in fraudulent activities?

Research paper about Pitney Bowes Example | Topics and Well Written Essays - 2500 words

About Pitney Bowes - Research Paper Example As a leader in the provision of software and hardware capabilities relating to information, the organization faces the need to institute new and improved ways of operations in order to realize its objectives. The organizational development plan, therefore, seeks to shed light on some of the most critical areas of action in addition to offering the new strategies that should be adopted by the organization in order to realize these transformations. Introduction and scope of the plan The major purpose of this organizational development plan is to bring about change and transformation at Pitney Bowes and improve the performance of the organization in the various sectors, as spelled in this plan. Specifically, the plan seeks to enable the organization to realize its objectives as spelled out in the strategic plan, achieve its vision and to transform the overall performance of the organization towards the better. In the context of managing mails, the company seeks to revolutionize the indu stry, as it has always done. More importantly, the plan seeks to ensure that the organization lives up to its mission statement of delivering shareholder and customer value through the provision of quality services in the market. Essentially, this is a document geared towards steering the development of the organization taking consideration of the fact that the present business environment has become almost uncertain and, hence, organizations must always strive to achieve and deliver the best in the market (Pederson, 2010). The plan will further monitor the realization of these goals through a systematic process that links up to the very expectations of the clients and other stakeholders of the organization. The plan is anchored on the Pitney Bowes organizational culture which stresses on the empowerment of staff and building the confidence of the organization’s customers scattered across the world (Lusterman, 2001). It s important to realize that any tangible organizational success can only be realized if the strategies and objectives of the organization are spelled out well and understood by all stakeholders. Everybody should be in the capacity to clearly understand their duties and roles towards the overall development of the organization. Background Pitney Bowes has always pursued a range of activities geared towards the development of the organization since its formation (2006). Much of these changes have always revolved around the establishment of a proper organizational structure that can ensure easy management and decision making. In addition, globalization and the new options brought about by technology have compelled the organization to radically transform its operations in order to comply with these demands of time. This is realized in the areas of research, development and technology where huge investments have been made in the recent past in order to improve operations and facilitate global operations. Indeed, the organization development p lan presents a good basis for the organization to effectively coordinate its operations and manage its increasing affairs across the world. The concept of organizational development is no longer a conventional affair in the business world. It requires proper strategies and sufficient resource allocations in order to succeed. Pitney Bowes has always been a leading provider of services and products in communication across