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WorldCom May Disclose More Accounting Errors

September 20, 2002|From Times Wire Services

WorldCom Inc. may tell regulators as early as today that it uncovered billions of dollars in additional accounting errors, sources familiar with the situation said Thursday.

One source told Reuters that the latest errors could total as much as $3 billion. The Wall Street Journal, citing "people close to the situation," said the additional accounting snafus totaled $2 billion.

WorldCom, the No. 2 U.S. long-distance telephone and data services company, had previously disclosed more than $7.2 billion of accounting problems. The Securities and Exchange Commission filed civil fraud charges against WorldCom in June, and the Department of Justice is conducting a probe of its own.

Officials from the Clinton, Miss.-based firm declined to comment on reports of additional errors.

WorldCom is expected to disclose the latest errors to the SEC in a report outlining its final tally of the accounting irregularities uncovered by the company's internal investigations, sources said.

The specific accounting errors were not immediately clear. The Wall Street Journal said some of the latest problems are related to the consolidation of foreign subsidiaries.

WorldCom, the parent company of MCI, filed for the world's largest bankruptcy in July after disclosing that it had inflated its profit by improperly booking $3.9 billion in expenses. Last month, the company uncovered an additional $3.3 billion in accounting errors.

At that time, WorldCom also said it may take a $50.6-billion charge for goodwill, and other charges to write down the value of its property and equipment.

Additional restatements won't affect its plan to emerge from bankruptcy intact, the company's chief restructuring officer said Thursday.

"The earnings restatements have no real connection to our ongoing business, our reorganization or our viability," said Greg Rayburn, who was hired by WorldCom to help lead the company through its Chapter 11 filing. WorldCom aims to emerge from bankruptcy by mid-2003.

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