ABSTRACT

WorldCom, Inc. perpetrated the largest accounting fraud in U.S. history. WorldCom, now
called MCI, emerged from bankruptcy protection on April 20, 2004 after being fined $750
million. In total, WorldCom reported accounting irregularities of $11 billion. It is estimated
that WorldCom went bankrupt, causing its shareholders to suffer losses of about $ 180 billion
and over 20,000 employees lost their jobs. A subsequent investigation by audit firm KPMG,
replacing Arthur Andersen, has costed up to $ 3.85 billion. This expense has been mistakenly
classified into the cost of capital, although this amount is used on daily expenses. That's why
in 2001 WorldCom's cash flow and profits were inflated. Also from this fraud was uncovered
and led to the collapse of WorldCom. Andersen's mistakes have enabled WorldCom to cheat
its accounting books to billions of dollars. This incident was like a stigma on Andersen's
name, which had wavered from Enron