Bernie Ebbers and Scott Sullivan

What power bases did Bernie Ebbers and Scott Sullivan rely on to get away with accounting fraud? The power bases are legitimate power, reward power, coercive power, dear power, referent power. Case Study Bernie Ebbers built WorldCom Inc into unmatched of the largest telecommunication firms. Yet he and CFO Scott Sullivan have become better known for creating a ample corporate accouting fraud that led to the largest bankruptcy in US history. Two investigative reports and subsequent court cases concluded that WorldCom executoves were responsible for billions in unsound or unsupported accouting entries.How did this mammoth accouting scandal occur without anyone raising the alarm? Evidence suggests that Ebbers and Sullivan help considerable power and fix that prevented accouting staff from complaining, or even knowing, near the fraud. Ebbers inner circle held tight control over the flow of all financial information. The geographically dispersed accouting groups were discouraged from sharing information. Ebbers group also dependent distribution of company level financial reports and prevented sensitive reports from being prepared at all.Accountants didnt even have access to the computer files in which any(prenominal) of the largest fraudulent entries were mde. As a result, employees had to rely on Ebbers executive team to justify the accounting entries that were requested. Another reason why employeees complied with questionable accoutong practices was that CFO Scott Sullivan wielded immense ad hominem power. He was considered a "whiz kid" with impeccable integrity who had won the prestigious "CFO Excellence Award. quot Thus, when Sullivans office asked staff to make questionable entries, some accountants assumed Sullivan had found an innovative and legal accouunting loophole. If Sullivans influence didnt work, other executives took a more coercive approach. Employees cited incidents where they were publicly berated for questioning headquarters d ecisions and intimidated if they asked for more information. When one employer at a branch refused to alter an accouting entry , WorldComs contoller threatened to fly in from WorldComs Mississippi headquarters to make the change himself.The employ changed the entry. Ebbers has similar influence over WorldComs board of directors. Sources indicate that his personal charisma and intolerance of dissention produced a passive board that rubber-stamped most of his recommendations. As one report concluded The room of Directord appears to have embraced suggestions by Mr. Ebbers without question or dissent, even under circumstances where its members now readily acknowledge they had significant misgivings regarding his recommendedd couse of action.