Pressures on the Manager in the Organization: Obstacles and Aids to Ethical Behavior

Abstract

WorldCom has been in the headlines since 2002 because of the $11 billion fraud that it acknowledged at that time. In order to please Wall Street and investors, WorldCom's top executives inflated the firm's profits by misallocating expenses and making many false accounting entries. The reactions of managers within WorldCom varied dramatically. Vice President of Internal Audit Cynthia Cooper and internal auditors Gene Morse and Glyn Smith became suspicious of accounting entries, which had no supporting documentation. They decided to pursue their suspicions. Working on their own time for several months and often late at night, the team ultimately uncovered $3.8 billion in false entries. During the course of their investigation, the internal auditors presented their suspicious information to both the chief financial officer Scott Sullivan and to WorldCom external auditors at Arthur Andersen.¹ Both Sullivan and the auditors at Arthur Andersen defended the entries and refused to provide additional information or to pursue the matter any further. The internal auditors at WorldCom found the fraudulent accounting entries four-quarters after they first began.

Citation

Cavanagh S. J., G.F. (2005), "Pressures on the Manager in the Organization: Obstacles and Aids to Ethical Behavior", Pava, M.L. and Primeaux, P. (Ed.) Crisis and Opportunity in the Professions (Research in Ethical Issues in Organizations, Vol. 6), Emerald Group Publishing Limited, Leeds, pp. 129-147. https://doi.org/10.1016/S1529-2096(05)06007-4