case 1.11 worldcom: the definition of an asset. worldcom case relevant technical knowledge...
TRANSCRIPT
Case 1.11
WorldCom:The Definition of an Asset
WorldCom CaseRelevant Technical Knowledge
Definition of an Asset According to GAAP, an asset must provide an
organization with a right to enjoy future benefits (e.g., by providing future cash flows for the organization). The organization must have control of this future benefit and the transaction that allowed this future benefit to exist for the organization must have occurred for an asset to exist.
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WorldCom CaseRelevant Technical Knowledge
PCAOB AS No. 5 – Paragraph A5 “Internal controls provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.”
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WorldCom CaseRelevant Technical Knowledge
PCAOB AS No. 15 - Paragraphs 5 & 6 Sufficiency “is the measure of the quantity of
evidence” needed. The quantity of evidence needed will depend upon the risk of material misstatement and the quality of evidence obtained. Indeed, the appropriateness of the evidence obtained relates to its appropriateness. Specifically, is the evidence that has been obtained both relevant and reliable “in providing support for the conclusions on which the auditor's opinion is based.”
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WorldCom CaseRelevant Technical Knowledge
PCAOB ET #102 - Paragraph #1 “in the performance of any professional
service, a member shall maintain objectivity and integrity, shall be free of conflicts of interest, and shall not knowingly misrepresent facts or subordinate his or her judgment to others.”
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Psychology Literature - How to Best Acquire Knowledge Feature Repeated Case Experiences with
Feedback; and Teach Technical Concepts within Real-
Life Contexts Consider the following additional cases:
Waste Management: The Matching Principle Waste Management: The Definition of an Asset WorldCom: The Matching Principle
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Epilogue - WorldCom CEO Bernard Ebbers sentenced to
25 years in prison
CFO Scott Sullivan pardoned from paying $13 million settlement due to having no significant assets remaining after selling $11 million mansion and surrendering his IRA
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Epilogue - WorldCom SEC set up a $150 million fund to
compensate investor losses
WorldCom emerged from bankruptcy as MCI, which was later bought by Verizon Communications
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