Strategic Audit Essay Example | Topics and Well Written Essays - 2750 words - 2

Strategic Audit - Essay Example Worldcom was regarded as world’s second-largest long-distance telecommunications company (Lyke, 2002). It was established in 1983 by Bernard Ebbers as a long distance discount service (LDS) provider. It initially sold AT&T WATS lines to small businesses. WorldCom was successful in selling LDDS and thus, the business grew rapidly (Lyke, 2002). The company acquired about 70 small and medium-sized companies. The acquired companies included IDB WorldCom, largest international carrier; WilTel, telecom carrier; and lastly, international phone company and parent of UUNET, MFS Communications (Lyke, 2002).  During the period 1997, the operational networks of CompuServe and America Online formed part of the giant company, WorldCom. The company also merged with Brooks Fiber and thereafter, it had acquired MCI. The merger and acquisition had rendered the company the second largest long distance carrier in the United States. However, prosperous position in the market of United States had not sustained as the company had to file bankruptcy in 2002 (Lyke, 2002). WorldCom filed for bankruptcy since it had encountered huge financial deficit. The company disclosed to have earned the inflated profit of $ 3.8 billion for the previous two years. Nevertheless, the amount was observed to rise beyond $ 10 billion, rendering it the â€Å"largest accounting fraud in U.S. corporate history† (Yahoo! Inc., 2007; Lyke, 2002).  The external auditor of WorldCom was Arther Anderson LLP and later, KPMG.