![]() Their internal auditors dealt with it but only after receiving whistle blowing disclosure. Their external auditors did not spot this. It was fraud because it went against their capitalisation policy and they did it to misrepresent their financial performance. What was the effect of Worldcom’s approach? They didn’t debit an expense and were able to overstate their profit. ![]() Deciding whether or not to capitalise expenditure can be tricky…Īlmost two decades ago a telecom giant in the USA, Worldcom, fraudulently capitalised computer paraphernalia such as cables and memory sticks.
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