WORLDCOM ACCOUNTING FRAUD EXPLAINED!

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  • Опубликовано: 24 дек 2024

Комментарии • 180

  • @eli.8991
    @eli.8991 4 года назад +58

    Thank you. You helped me understand the case better for class discussion Thursday.

  • @iamyournytemare4253
    @iamyournytemare4253 4 года назад +12

    I think I've grown addicted to this channel. This is exactly what I've been needing.

  • @themessengerkenswift707
    @themessengerkenswift707 2 года назад +8

    I actually worked at MCI WorldCom in 99', and none of us employees, naively working in our cubicles knew anything about any of this until it was already too late. 🤦🏾‍♂️

    • @bunnyman6321
      @bunnyman6321 2 года назад

      What happened to the employees of that company when this happened?

  • @DROIDFARM
    @DROIDFARM 3 года назад +16

    Thank you for breaking this down for us! Quick note it sounds good even in 2x speed!
    My BYUI accounting class sent me here and you did such a good job you won a like and subscribe from me!

  • @stacyliddell5038
    @stacyliddell5038 2 года назад +13

    Some people can study as many Ethics courses as they want without ever developing a sense of right and wrong. It's fascinating.

  • @cashonly2539
    @cashonly2539 4 года назад +17

    Lukin Coffee: Ohh, that's how NOT to cook my books.

  • @makenziemoikeha5767
    @makenziemoikeha5767 2 года назад +4

    Thank you for the video! Sent from my class at BYUI :)
    Why did the CEO get 25 years when it was the CFO suggesting it every time, and he only got 5 years?

  • @johnmcmanus1632
    @johnmcmanus1632 4 года назад +11

    I worked for a company called nationwide cellular we merged or were purchased by mciwordcomm and we all lost our jobs I worked for the company for 13 years ( nationwide cellular) and we came to work and the doors were locked it was devistating lost my 401 k that was turned into worthless stock that the company forced us into and then was not paid for the last 2 pay periods we were offered NO COMPENSATION!!! Nothing and no one talks about the employees I guess because we weren't rich people like maddoff or Enron we were just regular people trying to earn a living these people are disgusting and jailing them does nothing to make us whole again there should be a law that would liquidate assets of these criminals and divided up to the employees who had no knowledge about the fraud

    • @TheFinancialController
      @TheFinancialController  4 года назад +3

      I am sorry to hear this John. I will be sure to raise this issue in a future video so that people are aware of this issue.

    • @bunnyman6321
      @bunnyman6321 2 года назад

      Damn that's crazy.
      How did you overcome that?

  • @brainchildguru
    @brainchildguru 3 года назад +1

    My dad was one of the OGs of Worldcom before MCI bought them. He wasn’t involved in any of the fraud. He was on the wireless sales side of things.

  • @musicreboost
    @musicreboost Месяц назад

    Thanks for a great example! For me who is pursuing a role of financial controller it is very interesting and helpful

  • @prisonersdilemma939
    @prisonersdilemma939 2 года назад +1

    They are indeed relevant. You’ll be doing one on LUMEN Technologies, Inc in 2023.

  • @opjpopojkjpoj
    @opjpopojkjpoj Год назад

    hey what does it mean when you say booked an entry bogus thing please i need it quick thank you

  • @StephieA
    @StephieA 3 года назад +1

    What processes or systems would prevent or detect accounting frauds such as this?

    • @TheFinancialController
      @TheFinancialController  3 года назад +2

      An internal control for manual journal entries. Also and internal audit

  • @stunnerkay9556
    @stunnerkay9556 3 года назад +5

    Thanks for a wonderful video even though am a little behind watching your clips. I think objectivity is a great state of mind that was impaired by the misdirection of the CFO and poor judgement by the controller. I would also add that the misleading behavior of the plaintiffs also resulted in window-dressing the books. This was a high level and absolute disregard to WorldCom’s inefficient internal control systems. The Red flag surfaced from the very first attempt by Greedy players and that was a pivotal role for all of them to conceal the reality.

  • @lawrencealleyne1427
    @lawrencealleyne1427 2 года назад +2

    why did the CEO get a much harsher penalty?

  • @railyndungog7981
    @railyndungog7981 3 года назад +1

    1. Why do you think Betty got imprisoned even she just follow her superiors?
    2. If you are Betty, what should you do to avoid this?

    • @HonestFarmerLigue1Fan
      @HonestFarmerLigue1Fan 2 года назад +1

      Unless Betty could prove that she was heavily pressured and threatened by her superiors, very unlikely that she could got away.
      How to save youself:
      Return your "share of clout", report to Whistleblowing system or compliance or internal audit division, get a lawyer just in case you get threatened again.

  • @argjend90able
    @argjend90able 4 года назад +1

    I don't get why wordcom can't capitalize the towers. I mean the towers brings economic benefit, because the revenue depends on these towers. So is this not bringing economic benefit when it brings revenue?

    • @TheFinancialController
      @TheFinancialController  4 года назад +5

      In that case the towers did not benefit future periods, hence not an asset. Meaning the rent was for the benefit of the current period

  • @BrittaProducts
    @BrittaProducts Год назад +1

    Didn’t you miss the part where WorldCom tried to acquire Sprint as a means of covering up the accounting issues?

  • @kennethchow3996
    @kennethchow3996 2 года назад +1

    The merger with MCI meant Worldcom had no money to begin with.

  • @jasminemarano1649
    @jasminemarano1649 3 года назад

    What is the reason why the Ebbers loans were not reported in the annual report?

    • @TheFinancialController
      @TheFinancialController  3 года назад

      Thanks for pointing out this aspect of the fraud. I will do some research on it

    • @bunnyman6321
      @bunnyman6321 2 года назад

      @@TheFinancialController You figure out why?

  • @craigmonteforte1478
    @craigmonteforte1478 2 года назад

    i particpatedinBuilding their main Facility inNorthernVirginia and the way their Stock had grown so fast and so much we knew something had to be fishy the Company and the Employees spent money like it wouldn’t ever end coming in and being sensible we knew that wasn’t going to happen sadly i think their gigantic expensive facility is abandoned out by Dulless Virginia

  • @chirayugarg7207
    @chirayugarg7207 4 года назад +2

    Sir can we say that this scam was initial phase of dot com crash??

    • @TheFinancialController
      @TheFinancialController  4 года назад +2

      It was part of it. The common theme here is using metrics focused on revenue while ignoring cash flow. Nice observation 👏

    • @chirayugarg7207
      @chirayugarg7207 4 года назад

      @@TheFinancialController Thanks for the reply

    • @chirayugarg7207
      @chirayugarg7207 4 года назад

      Can u please elaborate ur point ??

    • @TheFinancialController
      @TheFinancialController  4 года назад +3

      LastBencher0P the bogus entry Worldcom booked focused on increasing revenue but the cash flow did not match the revenue obviously because the revenue didn’t exist

    • @chirayugarg7207
      @chirayugarg7207 4 года назад

      @@TheFinancialController thanks sir. Please make video on more accounting frauds

  • @nani543
    @nani543 Год назад +1

    Thank you!!! Very clear breakdown with the theory cleanly explained. Helped with my coursework

  • @elio8fadd
    @elio8fadd 4 года назад +4

    Very well explained. Thank you for this content. Although you did not focus very much on Ebbers' involvement in the whole case.

  • @basit147
    @basit147 4 года назад +2

    can u make a video on mci scandal they also had an accounting scandal

  • @rubenojeda1363
    @rubenojeda1363 4 года назад +3

    Extremely useful! A very clear explanation of the case. Thanks very much for sharing!

  • @jimamann8970
    @jimamann8970 3 года назад

    I worked for MCI before taken over by Worldcom, there was no mobile phones, especially in the U.S. when you described, MCI had previously decided to merge with British Telecom when Worldcom outbid them. MCI had the revenue and international reach to take Worldcom two another level. That merger was the catapult for Worldcom. There philosophy and culture where light years different. Not surprising of the outcome

  • @pittedmetal
    @pittedmetal 3 года назад +1

    WorldCom applied IFRS 16 decades before its existence! They should have created an equal liability though…

  • @aashimagupta5276
    @aashimagupta5276 3 года назад +1

    Got to understand this case in a very simple manner. Thank you

  • @aewcontrol2984
    @aewcontrol2984 10 месяцев назад

    So they moved a Nominal account to a real account?

  • @PASSIBOI
    @PASSIBOI 3 года назад +1

    Love from India🔥🇮🇳🇮🇳

  • @amritbrar7606
    @amritbrar7606 4 года назад

    I would like to know the entry they passed to cover the margins.

    • @TheFinancialController
      @TheFinancialController  4 года назад +3

      I don’t know the entry but it must be related to either revenue or cost of sales for it to improve margins

  • @Seth-f6h
    @Seth-f6h Год назад

    Can you make video on Enron?

  • @TanvirAhmed-xs5tm
    @TanvirAhmed-xs5tm 4 года назад +2

    Hey Bill, This is a great video and much in-depth yet small analysis on the Worldcom scandal. So thank you so much for that. I am currently trying to write a paper on corporate governance failure of Worldcom and the things you have said are really intriguing. I was wondering if you can kindly share the articles or sources of your findings. I would like to read them and have a better understanding so I can make a case for my paper. Once again, greatly appreciate your video and will forever be grateful if you can kindly share your sources.

    • @TheFinancialController
      @TheFinancialController  4 года назад +2

      Thanks. My sources are David Meyer interview in the video description plus simply a google search “Worldcom phone towers rent”

    • @TanvirAhmed-xs5tm
      @TanvirAhmed-xs5tm 4 года назад

      @@TheFinancialController Thank you! Will do.

  • @JeffreyWhitt
    @JeffreyWhitt 4 года назад +1

    I was there when all this happened... not a part of it but wow...

  • @Ayesha-yx8kn
    @Ayesha-yx8kn 3 года назад

    Hey I,m from Pakistan Snd just need the authentic information for my presentation and this what i actually want you just sort out my problem and explained everything in a complete manner with great compatibility
    Great work 👍

  • @nikitagarg3818
    @nikitagarg3818 Год назад

    I'd love to know and understand about the Harshad Mehta scam

  • @henrymarroquin5294
    @henrymarroquin5294 2 месяца назад

    Thank you so much for the video, really helped out with my research!

  • @john18563
    @john18563 4 года назад +2

    great video. so did they pretend to own the phone towers on the books? they were paying rent in 98 but not 99. am i getting the picture?

    • @TheFinancialController
      @TheFinancialController  4 года назад +4

      They improperly reclassified tower rent as an asset, claiming that the payments they made will benefit future periods. But in reality it was for the past period.

  • @accountingarchives1363
    @accountingarchives1363 4 года назад +1

    And now they revised the standard to an asset called "right of use"

  • @sohamsarkar8588
    @sohamsarkar8588 4 года назад +2

    It was a great explanation, thank you so much. Love from India.

  • @encoretp
    @encoretp 4 года назад +2

    Out of interest...who were the external auditors of WorldCom?

  • @HK-xj1oo
    @HK-xj1oo 2 года назад

    Many thanks for this . Great explanation

  • @MaiTr
    @MaiTr 3 года назад

    Thank you this and the one you did on Enron were super helpful 😇

  • @eulamaecataluna569
    @eulamaecataluna569 4 года назад +1

    So what's the role of the CEO? Why was he put in jail?

    • @TheFinancialController
      @TheFinancialController  4 года назад +1

      Yes, the CEO, Bernie Ebbers, was convicted in 2005 and sentenced to 25 years in jail. He actually just died in Feb 2020 aged 78, right after his early release.

    • @eulamaecataluna569
      @eulamaecataluna569 4 года назад

      @@TheFinancialController was he involved on the scandal?

    • @TheFinancialController
      @TheFinancialController  4 года назад +1

      The CEO is almost always involved :) and yes in this case he was found to have known about the fraud.

    • @eulamaecataluna569
      @eulamaecataluna569 4 года назад

      Wait, correct me if I'm wrong 😅 so the reason why the the CFO came up with the idea of making a bogus entry was because their margins were low?

    • @TheFinancialController
      @TheFinancialController  4 года назад

      Something like that. I highly recommend watching the video link in description with story told by the controller of worldcom

  • @filda2005
    @filda2005 3 года назад

    sorry, there is a lot of sauce and details but no principal explanation.
    Outcome:
    NEVER WATCH VIDEO WITH CAPS LETTERS AND EXLAMATION MARK AT THE END *HAWK*

  • @ektakansal273
    @ektakansal273 4 года назад

    I didn’t understand what is bogus entry

    • @TheFinancialController
      @TheFinancialController  4 года назад +3

      As Ty NEL wrote in a comment below "for the first 2-3 years of the fraud they initially under-reported about $3.8B in expense and accrued liability for the line rental fees payable to the local carriers at a much later time, which was around 50% of revenue. When there was no more room to under-report line expenses /liability, they capitalized line expenses as prepaid lease asset, by stretching the actual past 2-3 year line expenses to be 20-30 years lease payment, deferring a large portion of that payment a prepaid asset."

  • @alokoberoy5335
    @alokoberoy5335 2 года назад

    Great explanation 🙂

  • @mikehawk4856
    @mikehawk4856 Год назад

    Watching this in 2023 as the banks are collapsing. History doesn’t always repeat itself but it sure does rhyme

  • @vengatMaran
    @vengatMaran 3 года назад

    Cleaver explanation Man ...👍

  • @jameswaters8184
    @jameswaters8184 4 года назад +1

    Thanks these are excellent. Your channel will be huge someday!

  • @ohiotoledo3787
    @ohiotoledo3787 3 года назад

    do u like ur books medium rare or well done

  • @annog6673
    @annog6673 4 года назад +1

    Will you make a video about Wirecard? ;)

    • @TheFinancialController
      @TheFinancialController  4 года назад +2

      Hey Annog, I actually have a conflict of interest that prevents me from doing so. I am working on some other interesting topics. Cheers

  • @gopan1984
    @gopan1984 4 года назад

    What do you think would have happened without fraud?

    • @TheFinancialController
      @TheFinancialController  4 года назад +1

      Competition was rising and it's hard to tell whether they could have survived!

  • @bsparkle2166
    @bsparkle2166 5 месяцев назад

    Another great video!

  • @norman_zwakathatboy5815
    @norman_zwakathatboy5815 2 года назад

    i still cant get why the ceo got 25 years jail time ofwchich the cfo did all the decision making but he got only 5 years

  • @bruhbruh-jr5mp
    @bruhbruh-jr5mp 4 года назад

    hey man do you mind if i use the info in the video for a project? i will say the info was from you btw)

  • @benderbendingrofriguez3300
    @benderbendingrofriguez3300 3 года назад

    "Prepaid capacity"
    the words you don't want to see on a Statement of financial position.

  • @saifkhan-gd6kj
    @saifkhan-gd6kj 3 года назад

    Great effort bro keep it up

  • @jumper11able
    @jumper11able 3 года назад

    Lovely stuff mate keep it up

  • @vibhutisvibes6332
    @vibhutisvibes6332 Год назад

    Thankyou sir for vedeo...love from India ❣️

  • @j.robertohernandez9692
    @j.robertohernandez9692 4 года назад

    Excellent video.

  • @lamronjr8785
    @lamronjr8785 3 года назад

    Thank you for making a clear and easy to understand example

    • @lamronjr8785
      @lamronjr8785 3 года назад

      You made something that was designed to be complex and confusing intentionally, since these people certainly didn't want anyone following their Trail LOL, into something understandable

    • @TheFinancialController
      @TheFinancialController  3 года назад

      Thanks for watching

  • @mariedowney1676
    @mariedowney1676 Месяц назад

    Unbelievable but true

  • @LandoDubyaz
    @LandoDubyaz 4 года назад

    Thank you!! Your work is very much appreciated.

  • @beccacamberos5706
    @beccacamberos5706 3 года назад

    Great video! Thank you so so much!

  • @agatolwey6218
    @agatolwey6218 3 года назад

    It was MCI, then Worldcom, the. Verizon

  • @inquirer1016
    @inquirer1016 4 года назад

    Good job with the video, well explained.

  • @doriscastillo4438
    @doriscastillo4438 3 года назад +2

    THE POINT IS: IF YOU DO IT YOU ARE GOING TO JAIL RIGTH AWAY, THOSE PEOPLE GET OUT WITH MURDER, NO JUSTICE YOU STEAL A PACK OF CIGARETTES YOU GOT 4 YEARS,YOU SEE THE JUSTICE?

  • @bushy12987
    @bushy12987 4 месяца назад

    Thank you

  • @melbonesarra2821
    @melbonesarra2821 3 года назад

    Thank you for this.

  • @crazyistanbullu
    @crazyistanbullu 4 года назад

    Very good content. Thank you very much 👍

  • @khwiserosportsacademy6826
    @khwiserosportsacademy6826 3 года назад

    great video on accounting

  • @pravan-p
    @pravan-p 2 года назад

    Thank you sir

  • @gregorywilson2124
    @gregorywilson2124 2 месяца назад

    Lost a mint on that stock

  • @lavanyabanala9691
    @lavanyabanala9691 4 года назад

    Thank you ❤️❤️❤️❤️

  • @AdeebImthiaz
    @AdeebImthiaz 4 года назад

    Good stuff!

  • @UMANGPLAYS
    @UMANGPLAYS 3 года назад

    Anyone came here from the tv show The Wire?

  • @k.manisandeep7226
    @k.manisandeep7226 3 года назад

    Hi my self sandeep from india
    It was a great explanation tq
    I listened this video for my exam I think it will make my answer better to put on exam paper

  • @abdulrasheedrasheed9579
    @abdulrasheedrasheed9579 4 года назад

    Thank you bro

  • @gonzalesshairao.7667
    @gonzalesshairao.7667 3 года назад

    Thanks you so much :)

  • @vaibhavsahu8021
    @vaibhavsahu8021 4 года назад

    It was a nice video but you should have covered the whole case like afterwards of unrevealeing of the case

  • @le4-677
    @le4-677 2 года назад

    hahahahaha, how did they think they would get away with this?

  • @lisamccray6481
    @lisamccray6481 4 года назад +2

    So are you saying that they could've filed bankruptcy instead and found other jobs? No really. Like I said, I'm new. I came from being a waitress.

    • @TheFinancialController
      @TheFinancialController  4 года назад +1

      They filed for chapter 11 bankruptcy. All three execs served jail sentences

  • @Jessiemats
    @Jessiemats 4 года назад

    Thanks

  • @mdmiltonhossain2038
    @mdmiltonhossain2038 2 года назад

    Great

  • @aylo2412
    @aylo2412 Год назад

    you can't explain... I didn't get anything

  • @sarwaralam3977
    @sarwaralam3977 4 года назад

    👍

  • @jcs0984
    @jcs0984 2 года назад

    Your video needs volume normalization. I had to turn my earbud volume down so you didn't blow out my ears

  • @hunarkareem6182
    @hunarkareem6182 4 года назад +1

    I like your video, but I hope you say AHH less.

  • @bakhtiyorkuliev5293
    @bakhtiyorkuliev5293 Год назад

    Great