2. What are the ethical issues as identified in AICPA Code of Professional Conduct which related to WorldCome case? Please remember to cite the source: the essay must correctly cite relevant authoritative or non-authoritative resources WorldCom was founded by Bernard Ebbers among its early investors in 1983. During the company's susscessfull time, WorldCom emerged as one of the leading telecommunications company in the United States, which was offering discounted long- distance services. However, during 2001 and 2002, to make company's financial statements look good and attrachtive with the investors, WorldCom used questionable accounting techniques to try to hide the company losses from investors. WorldCom inflated net income and cash flow by recording expenses as investments in order to hide its falling profitability. By capitalizing expenses, Worldcom exaggerated profits by $3.8 billion in 2001 and $797 million in the first quarter of 2002. By the results, Worldcom was able to report a profit of $1.4 billion instead of showing a net loss of $1.4 bilion (Hayes, 2023). There were numerous key individuals and entities were implicated in the WorldCom scandal, which were including CEO Bernie Ebbers, CFO Scott Sullivan, and the company's auditing firm, Arthur Andersen. The Wall Street analyst Jack Grubman also contributed to the misconduct by providing favorable ratings for the telecom company (Hayes, 2023). Consequently, WorldCom filed for bankruptcy as a result of the scandal revealing. Bernard Ebbers was convicted of securities fraud and sentenced to 25 years in prison in 2005. Former CFO Scott Sullivan received a five-year jail term after pleading guilty and cooperating with authorities. Jack Grubman was terminated from his position at Salomon Smith Barney and fined $15 million by the SEC, in addition to being barred from participating in securities exchanges. In the WorldCom scandal, the Report of Investigation by the Special Investigative Committee of the Board of Directors of Worldcom, Inc. revealed that the company did not have a code of ethics in 2001. According to the Board of Directors, the only mention of ethics among its staff was a section in the Employee Handbook, which briefly advised against fraud and dishonesty, stating that such behavior would not be allowed, and advised employees to report any unlawful or unethical behavior to their managers and/or the Human Resources department. WorldCom only began drafting the Code of Ethics in early 2000. During the period from May 2001 to January 2002, legal counsel distributed drafts of the Code of Ethics to several senior managers. This report gained approval from Sullivan and other executives to complete the document. However, when presented with a draft, Ebbers purportedly dismissed the idea of a Code of Ethics, stating that it was a significant waste of time. It wasn't until after the fraud was exposed that the Company officially embraced a Code of Business Ethics in the Fall of 2002, making it accessible on WorldCom's internal website by early October 2002 (Beresford, Katzenbach, & Rogers, 2003)/n

Fig: 1