Were the external auditors and board o" directors blameWorth in this case

Both the external auditors and board of directors are blameworthy and the external auditors did
not properly exercise audit procedures when reviewing WorldCom & they trusted WorldCom and as
a result did not investigate any further the board of directors did not play a significant enough role
Other than attending meetings which were short and brief and did not matter much they did not
address the concerns employees had regarding the operations of the company and the board of
directors wasn"t even aware of the fraudulent financial reporting.

The blame for Andersen"s failure to detect the fraud appears to lie WIth personnel both at Andersen
and WorldCom Certain WorldCom personnel maintained tight control over information that
Andersen needed altered documents With the apparent purpose of concealing from Andersen items
that might have raised Questions

The board of directors who should actually monitor the executives, helping in the direction of the
company; instead was just like leaving everything to the management itself to do whatever they feel
right. None of the outside directors had regular communications with the top management or with
other employee outside of board or committee meetings and prior to April 2002, they were never
met by themselves to discuss matter related with WorldCom. They were taking everything easy, did
not do anything except attending the board meeting which was presided and decided by Ebbers, and
as a return, get the dividend annually. This shows how distant they were from the management of
the company. As the board of directors, they had significant role in driving the
company performance towards better and higher, not to just waiting for the returns. On the other
side, the external auditors should also blame. As an external auditor, they should be independent
and unbiased in their decision.

Just because WorldCom was its ‘flagship’ and its most ‘highly coveted’ client, didn’t means that
Arthur Andersen should cover for them. Instead of recognizing WorldCom as highly fraud
committed client, they change it to only moderate risk client. This shows how bias they are in order
to please the customer. Even though, they were restricted in gaining access to the company
information, still they manage to perform audit that shown the clue of fraud committing. It can be
clearly seen that the auditor was a part of the fraud as they rated WorldCom as fair and it was
actually release information that the company was in a good condition