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Outcome:

Since committing wire fraud and for filing a fraud bankruptcy case, Hecker was sentenced to 10 year imprisonment and was charged with various criminal charges of alleging the trust funds of his children. He is sentenced for 10 years and was mounted with the amount of debt, he would never be able to pay during his life.

Prevention:

If Hecker would have controlled his lavish expenses and invested the funds into the business to manage and flourish the business, then such was not the case. The ethical behavior and general trade practices of paying the debt on time can prevent the fraud on happening.

Financial Impact:

Denny Hecker was burdened with a debt of $ 767 million and $ 660 million of revolving credit. The fraudulent activity created heavy losses for the investor and for the Chrysler Financial.

WorldCom

Issues:

WorldCom is one of the leading Telecommunications company and it inflated its assets by $ 11 billion in the financial statements. The inflated asset fraudulently increased the value per share of the company.

Facts:

CEO Bernie Ebbers underreports the line cost and he inflated the cost of line. The communication line cost set up by the company was capitalized and the same was not treated as revenue expenditure. The expenses was not recorded and capitalized and the revenue of the company was inflated with artificial and fake accounting entries (Tran, 2002).

Weakness:

The weakness behind the fraud was inappropriate accounting and internal controls. The auditors of the company certified the financial statements and defraud the investors. The deficiency in internal accounting and treatment of expenses was the main cause behind the fraudulent activity.

Outcome:

The fraudulent activity was uncovered by the department of auditing. The CFO of the company was fired and controller of the company resigned from his job. The fraudulent activity leads to the bankruptcy of the company and the CFO of the company was sentenced to 25 years of imprisonment for committing fraud and creating a conspiracy. He also filed false documents with the regulators of the company (Obringer, 2015).

Prevention:

Through proper ethical education and training, the financial crisis may be prevented. It can also be possible that through ethics education the past does not discover a method to go over itself. An ethical training and moral development program will also serve the said cause. The behavior of corporations and auditors can be largely impacted and improved in large measure through education in ethics.

Financial Impact:

The fraudulent activity created a loss of $ 180 billion to the investor and the bankruptcy of the company lead to the loss of 30,000 jobs.

Reference