Double trouble for WorldCom

By Alun Williams

Posted on 9 Aug 2002 at 12:36

Financial discrepancies at the troubled telecommunications firm WorldCom are now believed to be at twice the level previously reported. Financial statements for the year 2000 will have to be redone...

The US Securities and Exchange Commission (SEC) has already charged WorldCom with fraud for covering up more than $3.85bn of losses by improper accounting. But now Reuters reports that an internal audit has highlighted a further $3.3bn of improperly reported earnings.

It seems that this latest 'misreporting' involves company reserves being cited as part of operating income. Previously, maintenance costs had been misrepresented towards operating income.

And this is not the final word on the matter - the continuing examination of accounts by the company's new set of executives is expected to throw up more discrepancies. 'Investors and creditors should be aware that additional amounts of improperly reported... income may be discovered and announced,' Reuters quotes a company spokesman.

Furthermore, the company is now also expected to write off a staggering $50.6bn from its assets. This will follow the true re-evaluation of all the company's property and equipment. It is a figure only bettered by AOL's $54.2bn adjustment back in May 2002.

WorldCom - which once claimed to carry half the world's Internet traffic - has already filed for bankruptcy.

Two WorldCom executives, including chief financial officer Scott Sullivan, face several counts of financial fraud.