5 Biggest Financial Scandals in US History

1. WorldCom

Topping the list of the 12 biggest financial scandals in U.S. history is WorldCom’s scandal, which occurred in 2002, and was discovered by the company’s internal audit team after attempting to discover what “prepaid capacity” accounting entries were. The team found 28 such entries made by the WorldCom team where expenses were capitalized instead of being recorded in the balance sheet. If these 28 entries hadn’t been recorded, a profit of $148 million would have been a loss of $395 million. By the time the Audit Committee meeting was called, the internal audit team had discovered around $3 billion worth of such transactions, which later increased to $3.8 billion. The combined collapse of WorldCom and Enron led to the enactment of the Sarbanes-Oxley Act, which was passed for tighter control on financial accounting.

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