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Whistleblowing and Ethics at WorldCom

Cynthia Cooper and WorldCom's internal audit team played a key role in uncovering accounting fraud at WorldCom. When Cynthia was indirectly threatened for questioning financial reserves being moved between companies, she took further action and began conducting both operational and financial audits with her team. Even without full access, they secretly obtained information to continue investigating in the name of doing the right thing. They ultimately informed both the audit manager and external auditors brought in after Arthur Anderson was replaced. While WorldCom's internal audit team eventually uncovered the fraud, they were initially missing some important qualities. All effective internal audit departments require characteristics like intellectual wisdom to know what to look for, as well as honesty and courage to question financials if

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196 views2 pages

Whistleblowing and Ethics at WorldCom

Cynthia Cooper and WorldCom's internal audit team played a key role in uncovering accounting fraud at WorldCom. When Cynthia was indirectly threatened for questioning financial reserves being moved between companies, she took further action and began conducting both operational and financial audits with her team. Even without full access, they secretly obtained information to continue investigating in the name of doing the right thing. They ultimately informed both the audit manager and external auditors brought in after Arthur Anderson was replaced. While WorldCom's internal audit team eventually uncovered the fraud, they were initially missing some important qualities. All effective internal audit departments require characteristics like intellectual wisdom to know what to look for, as well as honesty and courage to question financials if

Uploaded by

Melanie
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Ethics at Work.

Chapter 5 Melanie Little


Questions:
a. Describe the role of Cynthia Cooper and the rest of WorldComs internal
audit team in revealing the accounting frauds at WorldCom.
Cynthia Cooper and the others in the WorldCom internal audit team, took questions
that were asked of them and ran with them. When Cynthia was told of reserves
being taking from one company and written down in another, she questioned it.
When she was indirectly threatened, she took further action and told others in the
internal audit department and began not only operation audits, but financial audits
as well. They took internal questions seriously and started uncovering quite a
scheme in many different areas. Even in areas in which they werent given access,
they were secretly obtaining information in the name of doing the right thing. They
told the audit manager and also the external audit group that was taking over after
Arthur Anderson was ousted by Enron.
b. Consider whistleblowing in the context of virtue ethics. What
virtuous character traits are required of the whistleblowing?
Virtue ethics is having the right character as the most important aspect of morality.
This is opposed to utilitarian or deontological theories that look to outside duties or
consequences of doing the right thing. Virtue ethics looks into the person and the
willingness to have morals in line with the golden mean (not too extreme in either
end of the spectrum). In the case of whistle blowers, I think having courage is one
of the most important virtues of character. You really have to be unafraid to stand
up to pressure from others who are perpetrating the suspected actions; whether its
verbal threats, indirect threats, or in the face of being fired. In this case of
WorldCom, I think that Cynthia Cooper also had on her side the virtue of
friendliness. There was a reason that she wasnt afraid to pick up the phone and
take to people in her organization and in the outside audit department.
Additionally, she had to be friendly enough to have the others in the internal audit
department follow her lead into the clues that were being found.
c. Describe the most important characteristics or qualities of an effective
internal audit department and explain whether or not these qualities were
missing in WorldComs Internal Audit Department.
An effective audit department should have characteristics of intellect/practical
wisdom foremost. If they dont know what theyre looking for, how can they ever
find it. They also have to have honesty and courage to be able to question what is
happening if they see something off base. As the bankruptcy officer noted, even
though the internal audit department eventually did what they were supposed to
do, they first shouldve followed the duty of the auditor to perform with professional

skepticism. I guess from this viewpoint, they shouldve been more separated from
the finance group that they ultimately reported to at the time.

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