The story of the telecom giant WorldCom came to a sad turn in 2002 as the firm f

Question

The story of the telecom giant WorldCom came to a sad turn in 2002 as the firm filed for bankruptcy, with some of the managers facing criminal charges for fraud. In 2000 a severe slump in the telecom business led to pressures within WorldCom to reduce expenses and improve the financial statements to meet investor expectations. On orders from top managers, accountants within the firm created fraudulent financial statements, ultimately resulting in an $11 billion fraud. The fraud was detected as a result of an inquiry by the SEC, which led an internal auditor within WorldCom to start an investigation that uncovered the fraud in 2002. The successor firm, MCI (which had previously merged with WorldCom and is now part of Verizon), under the leadership of new top management, formed the office of chief ethics officer who had the responsibility for MCl's policy of training all MCl's U.S. based employees, an ethics hotline, an ethics pledge signed by the firm's top 100 executives, and a company code of ethics, among other responsibilities. What should be the role of an ethics officer? To whom should the ethics officer report within the organization? Do you think MCI had a good plan for ensuring ethical behavior within the firm? How would you change the MCI ethics policy, if at all? What role does the Management Accountant and the Cost Management Information System play in a company's ethical policy and practices?

Explanation / Answer

Ethics officer should create awareness about the good practises and should train the employees about Good Ethics and Unethical works. Ethics should also educate the employees the implications of unethical work and the impact of unethical work on the overall organisation as a whole and on its stake holders. Ethics officer should also keep an eye on all the activities of the organization and should do the random audit of some of the processes so that any unethical work can be caught.

Ethics officer should report the Board of Directors/ general Counsel with in the organisation. Or it can also report to any independent body existing in the organisation such as Audit Committee.

I think MCI had a good plan of creating a position of Ethics officer and creating awareness about the Ethics practise with in the organisation and taking the pledge from top 100 Executive, however, I would like to bring some more actions here as an Ethic officer, firstly, every employee must sign an ethics pledge, secondly, Ethics officer should also check that people are really following the ethics at work for this he would like to do some random audit work.

Management Accountant and the cost management information system play vital role in the organisation supporting the Ethical policy, It is the management accountant roles to give the complete analysis and data to the management, providing of accurate data to the management, guiding the management by providing correct information at correct time. All this help in setting up the correct ethical practise in the organisation.

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