<< Anyone know the auditor for WorldCom?? Member Alan Partridge
The info. you are looking for is in this article - not hard to find out :
WorldCom Finds $3.8 Billion Error, Fires CFO Tue Jun 25,10:38 PM ET By Peter Henderson and Jessica Hall
SAN FRANCISCO/PHILADELPHIA (Reuters) - WorldCom Inc., the No. 2 U.S. long-distance telephone and data services company, on Tuesday said it fired its chief financial officer after uncovering improper accounting for almost $4 billion in expenses, marking the latest financial scandal to rock corporate America.
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WorldCom, which is already under investigation by the Securities and Exchange Commission ( news - web sites), said it would restate its financial results for 2001 and the first quarter of 2002 to show net losses.
It also plans to cut 17,000 jobs, or more than 20 percent of its work force, starting on Friday, in a bid to save $900 million a year. It also will pare its capital spending budget to $2.1 billion.
The news came just seven weeks after co-founder Bernie Ebbers, who built the company through more than 60 acquisitions over the past decade, resigned as chief executive officer. The accounting problems could derail WorldCom's talks with its lenders to secure $5 billion in financing, without which it may face a cash-crunch next year, analysts said.
Shares of WorldCom plunged in after hours trading on Tuesday, hitting a low of 20 cents a share on the Island system from a close of 83 cents on Nasdaq. The previous closing low was 87 cents, while the stock had traded as high as $16.06 in the past 52 weeks.
"When you look at the history of WorldCom, and their acquisition trail, you have a classic wheeler-dealer. And now this is the age were wheeler-dealers get called for what they are," said Frank Dzubeck, president of consulting firm Communications Network Architects.
Clinton, Mississippi-based WorldCom is the latest company linked to accounting firm Andersen that faces accounting scrutiny. Andersen, whose role as the auditor of Enron helped lead to the energy trader's collapse, audited WorldCom's financial statements for 2001. It also worked with Qwest Communications International Inc., which is under accounting investigation, and Global Crossing Ltd., which filed for bankruptcy in January.
"All of these guys were cowboys and Andersen bent to their will. The scope of problems (in accounting practices) is narrowing down to some key individuals and associates -- and Andersen seems to be key," Dzubeck said.
In a statement, Andersen said that WorldCom had withheld key information and not consulted its auditors about the accounting treatment of the expenses.
WORLDCOM'S ACCOUNTING WOES
WorldCom said that accounting irregularities involving expenses misrecorded as capital expenditures had inflated its cash flow and that otherwise it would have reported a net loss for 2001 and the first quarter of 2002.
The accounting irregularities, which did not conform to Generally Accepted Accounting Principles, included transfers between internal accounts of $3.06 billion in 2001 and $797 million in the first quarter of 2002.
Those expenses should have been recorded on its income statement but were instead booked as capital expenditures, artificially boosting cash flow, the company said.
"Our senior management team is shocked by these discoveries," said John Sidgmore, WorldCom CEO for less than two months. He previous served as the company's vice chairman.
WorldCom said it had notified the SEC and asked its new accounting firm, KPMG, to review of its financial statements for 2001 and 2002. The audit committee of WorldCom's board retained William R. McLucas, of the law firm of Wilmer, Cutler & Pickering, former Chief of the Enforcement Division of the SEC, to conduct an independent investigation of the matter.
"The CFO didn't do this alone. Bernie didn't do this alone. But when something like this is uncovered, you go for the throat," Dzubeck said.
In addition to firing Sullivan, WorldCom also accepted the resignation of David Myers as senior vice president and controller.
"They are going to take a hit on this one, but it won't be fatal," said Jeff Kagan, an independent telecommunications analyst. "They will have to deal with this big issue, but it won't be a knock out punch," Kagan said, noting that the company has "real revenues and customers and networks and assets."
