- SAN FRANCISCO (Reuters) -
WorldCom Inc., the No. 2 U.S. long-distance carrier, on Tuesday said it
had fired its chief financial officer after uncovering improper accounting
of almost $4 billion in expenses, in the latest financial scandal to rock
Corporate America.
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- WorldCom also said it would cut 17,000 jobs, or more
than 20 percent of its work force, starting on Friday, a cost-cutting move
expected to save $900 million on an annual basis.
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- The Clinton, Mississippi-based company 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.
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- 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.
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- Accounting firm Andersen, whose role as the auditor of
Enron helped lead to the energy trader's collapse, had audited WorldCom's
financial statements for 2001.
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- Andersen said its work for WorldCom complied with professional
and Securities and Exchange Commission standards.
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- "The WorldCom CFO did not tell Andersen about the
line cost transfers nor did he consult with Andersen about the accounting
treatment," Andersen said in a statement. "It is of great concern
that important information about line costs was withheld from Andersen
auditors by the chief financial officer of WorldCom."
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- The auditing firm said that WorldCom's financial statements
for 2001 should not be relied upon.
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- Shares of WorldCom had plunged in after hours trading
on Tuesday following a report by CNBC that the company had uncovered accounting
irregularities.
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- The stock fell to 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.
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- WorldCom also said it had fired Chief Financial Officer
Scott Sullivan and accepted the resignation of David Myers as senior vice
president and controller.
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- "Our senior management team is shocked by these
discoveries," said John Sidgmore, WorldCom CEO for less than two months.
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- "I want to assure our customers and employees that
the company remains viable and committed to a long-term future. Our services
are in no way affected by this matter," he said in a statement.
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- WorldCom said it had notified the Securities and Exchange
Commission and had asked auditor KPMG to undertake a comprehensive review
of its financial statements for 2001,
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