ACCT19083 Final Assignment: Analyzing WorldCom's Ethical Failures

This homework assignment, ACCT19083 Final Assignment Term 2, 2017, examines the ethical and corporate culture failures of WorldCom. The assignment delves into key concepts such as informed consent and abuse of official position, analyzing how these principles were violated within the company. The student's responses explore the absence of a strong ethical framework at WorldCom and the lack of transparency, which contributed to the unethical actions of senior and middle-level managers. The assignment also considers how an institutionalized ethics program could have mitigated these issues by establishing clear guidelines, ethical training, and communication channels to address unethical practices. The student uses case study information and external research to support their analysis, offering a comprehensive overview of the ethical shortcomings that led to WorldCom's downfall. The assignment is a detailed exploration of business ethics and corporate governance within the context of the WorldCom scandal.

ACCT19083 Final Assignment
Term 2, 2017
Student ID:………………………………. Student name……………………………………………………..
Marker’s overall comments: The markers may include any
final comments here.
Overall Mark (Total) out of 40:
0

Part A Question 1: Did Buddy, Troy and Betty give informed consent to making the requested accounting
adjustments? Explain your answer. You should also explain the concept of "informed consent" before
answering the question.
Answer: The informed consent refers to the process of granting permission in the light of full knowledge. It is the
process of communication wherein a person is enabled to make a voluntary decision. The person should have
complete knowledge regarding the purpose and the consequences of an action. In the present case, Buddy, Troy
and Betty did not share complete information regarding the consequences of their action. They only shared to the
middle-level managers that they need to adjust the accounts of the firm; however, serious consequences of the
actions were not shared with these accountants.
References:
Miller, F., & Wertheimer, A. (2010). The Ethics of Consent: Theory and Practice. Oxford University Press, USA.
Marker’s Comments: The marker will provide feedback here. Mark (5):
0
Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Demonstrates a balanced and very
high level of detailed knowledge of
core concepts by providing a very
high level of analysis. Utilises
current, appropriate and credible
sources.
Demonstrates a balanced and high
level of knowledge of core
concepts by providing a high level
of analysis. Utilises mostly current,
appropriate and credible sources.
Demonstrates a good level of
knowledge of some of the core
concepts by providing some level
of analysis. Utilises some current,
appropriate and credible sources.
Demonstrates limited knowledge of
core concepts by providing a
limited level of analysis. Utilises
few current, appropriate and
credible sources.
Demonstrates little, if any,
knowledge of the core concepts
with extremely limited, if any,
analysis. Utilises little, if any,
current, appropriate and credible
sources.

Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Quality of writing at a very high
standard. Paragraphs are
coherently connected to each
other. Correct grammar, spelling
and punctuation.
Quality of writing is of a high
standard. Paragraphs are mostly
well structured. Few grammar,
spelling and punctuation mistakes.
Quality of writing is of a good
standard. Few grammar, spelling
and punctuation mistakes.
Some problems with sentence
structure and presentation
Frequent grammar, punctuation
and spelling mistakes. Use of
inappropriate language.
Quality of writing is at a very poor
standard so barely
understandable. Many spelling
mistakes. Little or no evidence of
proof reading.
The assessment presents a
detailed and focused summary of
the ideas presented; drawing clear
and well thought-out conclusions.
The assessment presents a fairly
detailed and focused summary of
the ideas presented; drawing fairly
clear and well thought-out
conclusions.
The assessment presents a
somewhat detailed and focused
summary of the ideas presented;
providing some evidence of
conclusions.
The assessment provides limited
detail with no clear summary of the
ideas presented; drawing limited
conclusions.
The assessment fails to provide
any clear evidence of the ideas
presented; drawing no clear
conclusions.

Part A Question 2: Did Scott and David engage in an abuse of their official position? Explain your answer. In your
answer you should also explain what "abuse of official position" means in terms of business ethics.
Answer: The abuse of official position refers to the act done in the official capacity for some personal gain. It is an
unlawful act done which affects the performance of the official duties of a person. These decisions or acts gives an
advantage to the decision-maker or a third person closely connected to him. There are several forms of misuse
such as use of public resources or abusing the trust of the people. In the present case, Scott and David abused
their official position as they changed the account balance sheet of the organization.
References:
Shaw, W.H. (2016). Business Ethics: A Textbook with Cases. Cengage Learning.
Marker’s Comments: The marker will provide feedback here. Mark (5):
0
Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Demonstrates a balanced and very
high level of detailed knowledge of
core concepts by providing a very
high level of analysis. Utilises
current, appropriate and credible
sources.
Demonstrates a balanced and high
level of knowledge of core
concepts by providing a high level
of analysis. Utilises mostly current,
appropriate and credible sources.
Demonstrates a good level of
knowledge of some of the core
concepts by providing some level
of analysis. Utilises some current,
appropriate and credible sources.
Demonstrates limited knowledge of
core concepts by providing a
limited level of analysis. Utilises
few current, appropriate and
credible sources.
Demonstrates little, if any,
knowledge of the core concepts
with extremely limited, if any,
analysis. Utilises little, if any,
current, appropriate and credible
sources.
Quality of writing at a very high
standard. Paragraphs are
coherently connected to each
other. Correct grammar, spelling
and punctuation.
Quality of writing is of a high
standard. Paragraphs are mostly
well structured. Few grammar,
spelling and punctuation mistakes.
Quality of writing is of a good
standard. Few grammar, spelling
and punctuation mistakes.
Some problems with sentence
structure and presentation
Frequent grammar, punctuation
and spelling mistakes. Use of
inappropriate language.
Quality of writing is at a very poor
standard so barely
understandable. Many spelling
mistakes. Little or no evidence of
proof reading.
The assessment presents a
detailed and focused summary of
the ideas presented; drawing clear
and well thought-out conclusions.
The assessment presents a fairly
detailed and focused summary of
the ideas presented; drawing fairly
clear and well thought-out
The assessment presents a
somewhat detailed and focused
summary of the ideas presented;
providing some evidence of
The assessment provides limited
detail with no clear summary of the
ideas presented; drawing limited
conclusions.
The assessment fails to provide
any clear evidence of the ideas
presented; drawing no clear
conclusions.

Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
conclusions. conclusions.

Part A Question 3: Based on what you have read in the case study, describe the corporate and ethical culture of
WorldCom. You should then perform some research into WorldCom's culture and explain what others have
reported.
Answer: According to the case study, the corporate and ethical culture of the organization did not exist. The
senior as well as middle level managers did not know what actions are needed to be taken in controversial
situations. Even if the organization has developed some ethical guidelines, the employees do not seek it. The
company did not have an independent Board of Directors and transparency was absent in the organization
culture. Moreover, formalized and well-documented policies and procedures were not designed in the
organization through which the employees can raise concern regarding the unethical practices at higher hierarchal
level.
References:
Stefano, T.F. (2005). WorldCom's Failure: Why Did It Happen? Retrieved on 11 October 2017 from
https://www.ecommercetimes.com/story/45542.html
Marker’s Comments: The marker will provide feedback here. Mark (5):
0
Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Demonstrates a balanced and very
high level of detailed knowledge of
core concepts by providing a very
high level of analysis. Utilises
current, appropriate and credible
sources.
Demonstrates a balanced and high
level of knowledge of core
concepts by providing a high level
of analysis. Utilises mostly current,
appropriate and credible sources.
Demonstrates a good level of
knowledge of some of the core
concepts by providing some level
of analysis. Utilises some current,
appropriate and credible sources.
Demonstrates limited knowledge of
core concepts by providing a
limited level of analysis. Utilises
few current, appropriate and
credible sources.
Demonstrates little, if any,
knowledge of the core concepts
with extremely limited, if any,
analysis. Utilises little, if any,
current, appropriate and credible
sources.

Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Quality of writing at a very high
standard. Paragraphs are
coherently connected to each
other. Correct grammar, spelling
and punctuation.
Quality of writing is of a high
standard. Paragraphs are mostly
well structured. Few grammar,
spelling and punctuation mistakes.
Quality of writing is of a good
standard. Few grammar, spelling
and punctuation mistakes.
Some problems with sentence
structure and presentation
Frequent grammar, punctuation
and spelling mistakes. Use of
inappropriate language.
Quality of writing is at a very poor
standard so barely
understandable. Many spelling
mistakes. Little or no evidence of
proof reading.
The assessment presents a
detailed and focused summary of
the ideas presented; drawing clear
and well thought-out conclusions.
The assessment presents a fairly
detailed and focused summary of
the ideas presented; drawing fairly
clear and well thought-out
conclusions.
The assessment presents a
somewhat detailed and focused
summary of the ideas presented;
providing some evidence of
conclusions.
The assessment provides limited
detail with no clear summary of the
ideas presented; drawing limited
conclusions.
The assessment fails to provide
any clear evidence of the ideas
presented; drawing no clear
conclusions.

Part A Question 4: Describe how an institutionalised ethics program might have helped WorldCom at this very
moment (described in the case study). You should explain what a useful ethics program might contain.
Answer: It is important to create an effective ethics and compliance program for developing an effective
organization culture in the organization. There are some essential features which must be a part of an effective
ethics program such as top management support, ethics committee and board, ethics officer and code of conduct.
The top management should have an active role in the development of ethics program and the overall
development of ethical culture in the organization. The support from the top management is essential in
designing an ethical program in the organization. An ethics committee board should be designed as which
monitors the operations of the organization and its various employees. Other than that, the formal ethics program
should also be implemented in the organization. The ethic program should contain the ethics polices, ethics
training and a communication system so that the employees can communicate any time they are facing an ethical
situation.
WorldCom could have also been benefitted with the implementation of an official ethics program as the middle-
level and the senior-level managers of the organization would have consulted the organization’s policies on ethics
the unethical practices could have been prevented in the organization.
References:
Marker’s Comments: The marker will provide feedback here. Mark (5):
0

Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Demonstrates a balanced and very
high level of detailed knowledge of
core concepts by providing a very
high level of analysis. Utilises
current, appropriate and credible
sources.
Demonstrates a balanced and high
level of knowledge of core
concepts by providing a high level
of analysis. Utilises mostly current,
appropriate and credible sources.
Demonstrates a good level of
knowledge of some of the core
concepts by providing some level
of analysis. Utilises some current,
appropriate and credible sources.
Demonstrates limited knowledge of
core concepts by providing a
limited level of analysis. Utilises
few current, appropriate and
credible sources.
Demonstrates little, if any,
knowledge of the core concepts
with extremely limited, if any,
analysis. Utilises little, if any,
current, appropriate and credible
sources.
Quality of writing at a very high
standard. Paragraphs are
coherently connected to each
other. Correct grammar, spelling
and punctuation.
Quality of writing is of a high
standard. Paragraphs are mostly
well structured. Few grammar,
spelling and punctuation mistakes.
Quality of writing is of a good
standard. Few grammar, spelling
and punctuation mistakes.
Some problems with sentence
structure and presentation
Frequent grammar, punctuation
and spelling mistakes. Use of
inappropriate language.
Quality of writing is at a very poor
standard so barely
understandable. Many spelling
mistakes. Little or no evidence of
proof reading.
The assessment presents a
detailed and focused summary of
the ideas presented; drawing clear
and well thought-out conclusions.
The assessment presents a fairly
detailed and focused summary of
the ideas presented; drawing fairly
clear and well thought-out
conclusions.
The assessment presents a
somewhat detailed and focused
summary of the ideas presented;
providing some evidence of
conclusions.
The assessment provides limited
detail with no clear summary of the
ideas presented; drawing limited
conclusions.
The assessment fails to provide
any clear evidence of the ideas
presented; drawing no clear
conclusions.

Part B: Taking the viewpoint of Buddy Yates in this case study, step through what his decision might have been
had he followed the AAA decision model. You should fully explain his options under every step of the seven-
step model.
Answer: The decision making is the most challenging part of the managerial functions. Several times, the
managers of the organization have to take several decisions which are highly complex and comprises of ethical
dilemma. The present business environment is challenging and it becomes necessary for the managers to take
decisions which can be controversial and ethically demanding. In this regard, it is important that a business
organization takes decisions which do not harm any particular section of the society. There are various decision
models and frameworks which can be used to assist in the decision-making process. In regard to the present
situation, it can be critiqued that the management accounting is the branch of accounting system which deals with
the presentation of the accounting information such that the organization can perform different managerial
functions like planning, controlling, and decision-making in an effective manner. It is the application of different
techniques and methods so that the management can analyse the current financial status of the organization and
establish plans so that the economic objectives of the organization can be met (Klemstine & Maher, 2014). It revolves
around identification, presentation and interpretation of information for developing strategies and controlling the
supporting activities. It collects data from both external as well as internal resources through which the
management can perform various functions such as planning, controlling and decision-making in an efficient and
effective manner.
In the present, there are several models for taking ethical decisions in the business organization. However, AAA
framework or model is used as it is the most accepted and commonly used model for the organization.
If the viewpoint of Buddy Yates has been included in the decision-making process, the outcomes of the following
situation would have been different. It is important that the organization follows an ethical decision-making
process and adopts a model which can guide the senior officials at each stage of the decision-making process.
There are several business decisions which create ethical-issues for the managers. The ethical dilemma occurs due

to the impact of these decisions on different stakeholders. The American Accounting Association (AAA) Model is a
common model used by accountants to resolve ethical issues and take decisions which involve ethical dilemma.
There are seven steps in this model. In the first step, all the relevant information related to the case is collected. In
the present, Buddy Yates should collect all the relevant information regarding the case. It includes the issues in
the accounts and the balance sheets. Other than that, the information should also include the consequences
regarding the impact of different decisions. The organization should also ensure that appropriate background
information is collected regarding the case. It includes identifying the root cause of the problem and how various
approaches through which it can be solved. The information should also encompass other information pertaining
to the case.
In the second step, different ethical issues related to the case will also be investigated. In this step, all the
possible consequences related to the different actions will be investigated. The organization will consider the
possible course of action in the situation and the impact of each course of action on different stakeholders.
In the present case, the financial manger should investigate what ethical issues are at stake (Moehlre & moerhle,
2013). In the present case, if the accountants will jeopardize the balance sheet, it will be wrong to the
stakeholders. They will be kept blinded regarding the current status of the organization. If the organization
discloses its current accounting information, it will attract legal actions, as the company is unable to make
required profits during that year. The investors of the company will suffer from loss if the company will dissolve in
near future. In the third step, the organization identifies the norms, ethics and the ideal professional behaviour. It
is important to analyse different norms and ethically appropriate behaviour in different situations. Moreover, it is
also important that the organization adopts this behaviour in in complex ethical situations.
In the norms, value and principles, the organization should take assistance of the professional codes of ethics
developed by autonomous body or the societal expectations of the profession. In the present case, it is can be
critiqued that it is the responsibility of the accountants to create correct and transparent balance sheets and
annual reports. They should ensure that there is no discrepancy in the actual and declared profits. Otherwise, it
will be deception towards different stakeholders of the organization.
As per AAA model, the fourth step comprises evaluation of each alternative action. It involves brainstorming each

action which can be taken under these circumstances to ensure that appropriate course of action could be taken.
In complex business situations, it is important that the company evaluates each and every course of actions which
could have been taken to address the situation. After that, it is important that the organization evaluates the
impact of different actions on other stakeholders.
At this stage, each course of action is pondered without paying heed to the outcomes of that action. In the
present situation, there are two main courses of action which can be taken to address the situation. The first
course of action is to declare the actual profits and the balance sheet of the organization and asking time from
various investors, stakeholders and the government to address the situation. Another course of action is to
jeopardize the balance sheet of the organization and hide the actual profits and turnover from different
stakeholders (Becker Professional Education, 2017).
Now, the next step according to AAA framework is to impose the values, principles and norms identified in
previous section on different course of actions. Each step is evaluated on the basis of different norms, values and
principles and the decision-maker can arrive at a conclusion regarding which action accord with the ethical norms.
It is one of the most significant steps in the framework. It is important to evaluate each and every option with an
ethical framework so that the decision-maker can arrive at a proper conclusion. When the first action is evaluated
with the moral theories, it is identified that the action is unethical as the stakeholders are cheated regarding the
benefits of the organization. It will also negatively impact on the society as various customers might have invested
in the shares of the organization. The organization will also hide the facts from important stakeholders such as
government, employees and the customers (Jones, 2015). The accountants of the organization will also expose
themselves to the risk of being in the professional and legal trouble, if their act of jeopardizing the accounts
information will ever be exposed. On the other hand, declaration of the actual profits and the balance sheet will
be an ethical action. The organization can declare actual profits and annual turnover and ask other stakeholders to
provide time so that they can make changes in its current profitability structure.
The last action in this model is to select the most appropriate action for the organization. The business
organization should focus on taking the action which is most beneficial for the organization as well as the different
stakeholders (Epstein & Lee, 2012).

Conclusively, it can be stated that it is important to take ethical decisions in the different business environment.
Taking unethical or inappropriate decisions can negatively impact on different stakeholders and the organization.
It deters the image of the organization and negatively impact on the overall profitability and turnover of the
organization. The brand value and perception of the organization is very important in its overall profitability.
Therefore, it is important to take ethical decisions in such cases. However, in one situation the interest of one
entity breaches whereas in another situation, the interest of another party breaches. In such situations, it is
important that the organization takes actions which maximize the profits for all the stakeholders.
References:
Klemstine, C.F., & Maher, M.W. (2014). Management Accounting Research (RLE Accounting): A Review and Annotated Bibliography. Routledge.
Moehlre, S.R., & moerhle, J.R. (2013). Understanding Accounting Academic Research: Before and After Sarbanes-Oxley. Emerald Group Publishing.
Becker Professional Education. (2017). ACCA Approved - P1 Governance, Risk and Ethics (September 2017 to June 2018 exams). Becker Professional Education
Ltd.
Jones, S. (2015). The Routledge Companion to Financial Accounting Theory. Routledge.
Epstein, M.J., Lee, J.Y. (2012). Advances in Management Accounting. Emerald Group Publishing.
Marker’s Comments: The marker will provide feedback here. Mark (20):
0
Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
Demonstrates a balanced and very
high level of detailed knowledge of
core concepts by providing a very
high level of analysis. Utilises
current, appropriate and credible
sources.
Demonstrates a balanced and high
level of knowledge of core
concepts by providing a high level
of analysis. Utilises mostly current,
appropriate and credible sources.
Demonstrates a good level of
knowledge of some of the core
concepts by providing some level
of analysis. Utilises some current,
appropriate and credible sources.
Demonstrates limited knowledge of
core concepts by providing a
limited level of analysis. Utilises
few current, appropriate and
credible sources.
Demonstrates little, if any,
knowledge of the core concepts
with extremely limited, if any,
analysis. Utilises little, if any,
current, appropriate and credible
sources.
Quality of writing at a very high
standard. Paragraphs are
Quality of writing is of a high
standard. Paragraphs are mostly
Quality of writing is of a good
standard. Few grammar, spelling
Some problems with sentence
structure and presentation
Quality of writing is at a very poor
standard so barely

Exceeds Expectations
(High Distinction) 85-100%
Exceeds Expectations
(Distinction) 75 - 84%
Meets Expectations
(Credit) 65 – 74%
Meets Expectations
(Pass) 50 – 64%
Below Expectations
(Fail) below 50%
coherently connected to each
other. Correct grammar, spelling
and punctuation.
well structured. Few grammar,
spelling and punctuation mistakes.
and punctuation mistakes. Frequent grammar, punctuation
and spelling mistakes. Use of
inappropriate language.
understandable. Many spelling
mistakes. Little or no evidence of
proof reading.
The assessment presents a
detailed and focused summary of
the ideas presented; drawing clear
and well thought-out conclusions.
The assessment presents a fairly
detailed and focused summary of
the ideas presented; drawing fairly
clear and well thought-out
conclusions.
The assessment presents a
somewhat detailed and focused
summary of the ideas presented;
providing some evidence of
conclusions.
The assessment provides limited
detail with no clear summary of the
ideas presented; drawing limited
conclusions.
The assessment fails to provide
any clear evidence of the ideas
presented; drawing no clear
conclusions.