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BETTY VINSON, CYNTHIA COOPER, AND MORAL COURAGE: A CASE STUDY IN ACCOUNTING ETHICS AT WORLDCOM
David Christensen, Jeff Barnes, and David Rees1 Southern Utah University INTRODUCTION On 21 July 2002 the second largest telecommunications com any in the U!S!, "orldCom, #nc!, a lied for $an%ru tcy rotection! "orldCom failed $ecause of the $ad $usiness decisions of its e&ecutives to mani ulate earnings 'ith im ro er accounting entries! (he %ey e&ecutives involved in the fraud 'ere C)O Bernard )$$ers and C*O Scott Sullivan! (he accountants 'ho 'ere ressured $y )$$ers and Sullivan to re are im ro er accounting entries included Director of +eneral ,ccounting Bufford -ates, Controller David .eyers, Director of /egal )ntity ,ccounting (roy 0orman, and Director of .anagement Re orting Betty 1inson! )ach 'as convicted of securities fraud and received federal 2ail sentences, including $illionaire Bernie )$$ers 'ho received a 234year sentence in federal rison!2 Betty 1inson received a 34month 2ail sentence! ,nother %ey layer in this sad story of greed and conflicting loyalties is 1ice 5resident of #nternal ,udit Cynthia Coo er, a 'histle$lo'er 'ho 'ith t'o other internal auditors, +ene .orse and +lyn Smith, doggedly investigated and revealed the fraud to "orldCom6s audit committee! #n this case study you 'ill read a$out the ethical ressure faced $y Betty 1inson and Cythia Coo er as they each $alanced conflicting loyalties $et'een family, em loyer, and rofession! Betty first $al%ed then caved to the ressure and ruined her career7 Cynthia did not cave and 'as named one of three 85ersons of the -ear9 $y Time Magazine in 2002 for her moral courage at "orldCom :/acayo and Ri ley 2002;! PART 1 - ACCOUNTING FRAUD AT WORLDCOM Read 8, Staffer Ordered (o Commit *raud Bal%ed, (hen Caved9 :Susan 5ulliam, The Wall Street Journal, 2< June 200<, ! ,1;, availa$le online from 5ro=uest 0e's a ers at htt >?? ro@uest!umi!com? @d'e$A didB<3013CDE1FsidB2F*mtB<Fclient#dB1DG0FR=(B<0CF10ameB5=D!

(eaching notes are availa$le from christensendHsuu!edu! *or an e&cellent summary of the "ordCom scandal, see the formal indictment of Scott Sullivan and Bufford -ates, availa$le at htt >??fl1!findla'!com?ne's!findla'!com?hdocs?docs?'orldcom?ussullivanE2E02ind! df!
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"rite a one4 age essay 'ith t'o aragra hs! #n the first aragra h, summariIe the ethical ro$lem faced $y Betty 1inson, a C5, and Director of "orldCom6s .anagement Re orting Division! #n the second aragra h, descri$e ho' Betty res onded to her ethical dilemma, assuming she 'as a Certified .anagement ,ccountant and a mem$er of the #nstitute of .anagement ,ccounting :#.,;! #nclude references to s ecific standards in #.,6s Statement of Ethical Professional Practice, availa$le at htt >??'''!imanet!org?a$outJethicsJstatement!as ! PART 2 - WHISTLE BLOWERS AT WORLDCOM Read 8Uncoo%ing the Boo%s> Ko' (hree Unli%ely Sleuths Discovered *raud at "orldCom9 :S! 5ulliam and D! Solomon! The Wall Street Journal, <0 Octo$er 2002, ! ,1;, availa$le online from 5ro=uest 0e's a ers at htt >?? ro@uest!umi!com? @d'e$A didB22GC<DED1FsidB<F*mtB<Fclient#dB1DG0FR=(B<0CF10ameB5=D "rite a one4 age essay 'ith t'o aragra hs! #n the first aragra h, summariIe the ethical ro$lem faced $y Cynthia Coo er, a C5, and manager of internal auditing at "orldCom! #n the second aragra h, descri$e ho' Cynthia res onded to her ethical dilemma, assuming she 'as a Certified .anagement ,ccountant and a mem$er of the #nstitute of .anagement ,ccounting :#.,;! #nclude references to s ecific standards in #.,6s Statement of Ethical Professional Practice, availa$le online at htt >??'''!imanet!org?a$outJethicsJstatement!as ! PART 3 MORAL COURAGE AND FIRST PRINCIPLES .oral courage is the courage to $e moral L to act 'ith fairness, res ect, res onsi$ility, honesty and com assion even 'hen the ris%s of doing so are su$stantial! R! Midder :2003; indicates that 8moral courage does not $ac% us fearfully into dangerous corners so much as dra' us ine&ora$ly to'ard first rinci les! Done right, it is less a$out haIards and o$stacles than a$out virtues, standards, and rightness L the courage to $e moral!9 Read 8.oral Courage 4 , "hite 5a er9 $y R! Midder and .! Bracy :2001; availa$le online at htt >??'''!glo$alethics!org? u$?moralJcourageJ1140<42001! df! #n a one4 age essay, define 'hat moral courage means to you, and illustrate it 'ith the $ad e&am le set $y Betty 1inson and the good e&am le set $y Cynthia Coo er! .a%e s ecific references to one or more of #.,6s 8first rinci les9 listed in #.,6s Statement of )thical 5rofessional 5ractice, availa$le online at htt >??'''!imanet!org?a$outJethicsJstatement!as !

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REFERENCES #nstitute of .anagement ,ccounting :#.,;! 2003! Statement of Ethical Professional Practice! Online at Nhtt >??'''!imanet!org?a$outJethicsJstatement!as O Midder, R! 2003! .oral courage 4 'e face three challenges! ,ccessed online 2G Dec CD at Nhtt >??'''!'ashingtons ea%ers!com? rodJimages? dfs?Midder!Rush'orth!.oralJCour age!G!03! dfO! Midder, R! and .! Bracy! 2001! .oral courage L a 'hite a er! Camden, .aine> #nstitute for +lo$al )thics! /acayo, R! and ,! Ri ley! 2002! 5ersons of the year 2002! Time Magazine (22 Dec). Online at <htt >??'''!time!com?time?su$scri$er? ersonoftheyear?2002? oyintro!html > 5ulliam, S! 200<! , staffer ordered to commit fraud $al%ed, then caved! (he Wall Street Journal :2< Jun;> ,1! 5ulliam, S! and D! Solomon! 2002! Uncoo%ing the $oo%s> ho' three unli%ely sleuths discovered fraud at 'orldcom L com any6s o'n sniffed at cry tic clues and follo'ed hunches L miss coo er say no to her $oss! The Wall Street Journal :<0 Oct;> ,1!

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