tag:blogger.com,1999:blog-4426052636690673661.post965879033125510542..comments2023-10-16T15:06:21.563-04:00Comments on Friend Mouse Speaks: Book review: Extraordinary Circumstances: The Journey of a Corporate Whistleblower by Cynthia Cooper, Former Vice President, WorldComFriend Mousehttp://www.blogger.com/profile/10508344668185037119noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4426052636690673661.post-33090348394570549042008-09-12T12:28:00.000-04:002008-09-12T12:28:00.000-04:00It's certainly interesting to hear Mr. Morse's vie...It's certainly interesting to hear Mr. Morse's view, but as a fellow internal auditor I feel compelled to ask what steps Mr. Morse took to act on these concerns at the time.<BR/><BR/>From Mr. Morse's account, it would seem that these red flags were clear to any reasonable auditor at the time. Does he include himself? <BR/><BR/>If he was aware of some or all of the indicators for potential fraud, he was bound by professional obligation to act on them himself if he saw that his supervisor did not. Otherwise he would be just as guilty of standing "idly by." <BR/><BR/>On the other hand, if he was not aware of these indicators, perhaps he's not in the best position to decide what Ms. Cooper did or did not know or what actions she took. <BR/><BR/>It's easy to attack from afar and with hindsight. Might Mr. Morse be guilty of "hiding behind [an] excuse" by declaring that any errors by IA were all his supervisor's fault?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4426052636690673661.post-10629602783388138212008-02-22T19:33:00.000-05:002008-02-22T19:33:00.000-05:00This is the text of an unsolicited email I receive...<B>This is the text of an unsolicited email I received on 02/22/08 from Gene Morse, a former WorldCom internal auditor alongside Cynthia Cooper. Just goes to show that there is always more story to the story.</B><BR/><BR/>Greetings Friend Mouse, I saw your review of Ms. Cooper's book and felt compelled to forward this email to you. I sent the original to USA Today after they published an article about Ms. Cooper. I hate to see people get duped, as I once was, and through their being deceived facilitate the deception of others. Best of luck, Gene Morse<BR/><BR/>Date: February 19, 2008 04:37:13 PM CST<BR/>Subject: WorldCom's whistle-blower tells her story<BR/><BR/>Ms. Cooper knew there was a $2.3 billion undefined capital expenditures issue relating to the first nine months of 2001 capital expenditures at least by December 2001 and most likely some time prior to that (the $2.3 billon problem was uncovered during Glyn Smith's 2001 Capital Expenditures Review). Ms. Cooper and Mr. Smith did not bring this to the attention of the Audit Committee or anyone else and did not demand support for this (which presented about 1/3 of all of WorldCom's publicly reported Capital Expenditures through the first nine months of 2001). The $2.3 billion was not highlighted or even disclosed in the 2001 Capital Expenditures Review that was distributed in January of 2002. <BR/><BR/>Hiding behind the excuse that the WorldCom Internal Audit department only performed Operational Audits simply does not hold water and is not the case. During that same time period I was involved in an International Capital Expenditures Audit that revealed large accounting based frauds designed to protect internal capital budgets, not to defraud stockholders (the evidence was pulled by internal auditors from the accounting system). If the Operational Audit excuse is what Ms. Cooper wants to stand behind, then the 2001 Capital Expenditures Review simply chose to ignore 1/3 of the Operations as reflected by ignoring the $2.3 Billion in Corporate Allocations of Capital Expenditures. If Ms. Cooper had required support in December 2001 (which she had the full right and authority to do as given to her by the Board of Director's Audit Committee), then the Line Cost Capitalization number would have been that $2.3 billion rather than the ultimate $3.8 billion. <BR/><BR/>For whatever reason, Ms. Cooper stood idly by and allowed the $2. billion to grow to $3.8 billion in capitalized line costs. Just some of the events that occurred over the six months after the discovery of the $2.3 billion that may have prompted Ms. Cooper to finally take action include: (1) an SEC investigation, (2) discovery of other WorldCom financial fraud activity - the Wireless Bad Debt reversals, (3) changing external auditors from Arthur Anderson to KPMG, (4) replacement of Bernie Ebbers as CEO, and (5) internal and external talk of bankruptcy. Finally in May 2002, when bankruptcy was truly being seen as imminent and with all of these events forboding huge changes at WorldCom, Ms. Cooper decided to investigate the $2.3 billion in undefined 2001 Capital Expenditures. All she had ever needed to do was use Internal Audit's Board of Director's given authority to ask the accountants for support for that number. Who knows how radically different the outcome might have been had she made that query in December of 2001, rather than June of 2002.<BR/><BR/>Ask any Auditor you know if they would ignore and choose not to report a $2.3 billion unexplained issue to their superiors.<BR/><BR/>The evidence of the $2.3 billion can be found on page 118 of the following document.<BR/><BR/>>http://news.lp.findlaw.com/hdocs/docs/worldcom/bdspcomm60903rpt.pdf<BR/><BR/>Ms. Cooper must have chosen her motto that is in the USA Today article long after these events: from Goethe: "Things which matter most must never be at the mercy of things which matter least." And she was most likely, "seized by depression and anxiety" because<BR/>she feared someone in authority may determine that she bore some<BR/>responsibility for her inaction.<BR/><BR/>Regards, Gene Morse CFA, CPA,<BR/><BR/>"A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury." - John Stuart Mill (1806 -1873)Friend Mousehttps://www.blogger.com/profile/10508344668185037119noreply@blogger.com