Define: WorldCom Scandal

UK Accounting Glossary

Definition: WorldCom Scandal

What is the dictionary definition of WorldCom Scandal?

Dictionary Definition

The WorldCom Scandal was an accounting scandal involving the telecommunications company WorldCom, which was at the time the second-largest long-distance phone company in the USA (2002).

As the scandal surfaced, it emerged that WorldCom had dishonestly enhanced it’s financial results by approximately $11 billion USD through (i) falsely classifying various operating expenses as capital expenditure, and (ii) improperly manipulating it’s revenue reserves.

The former meant that many current expenses failed to be displayed on the profit and loss account, thereby appearing to inflate the companies short-term profits; whilst also artificially boosting the value of the assets.

The latter likewise created illusory profits whilst diminishing liabilities.

The fraud identified by internal auditors at WorldCom was at the time the biggest scandal in US history Рand led to the company subsequently filing for bankruptcy protection in 2002.

As a result of the scandal, several senior executives at WorldCom also faced criminal charges.


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Modern Language Association (MLA):
WorldCom Scandal. Payroll & Accounting Heaven Ltd. January 18, 2020
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WorldCom Scandal. Payroll & Accounting Heaven Ltd. (accessed: January 18, 2020).
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WorldCom Scandal. Retrieved January 18, 2020, from website:

Definition Sources

Definitions for WorldCom Scandal are sourced/syndicated from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 29th January 2019.