10 Jun 2003
Sullivan, who is currently awaiting trial on fraud charges is accused of 'making accounting entries that had no basis in generally accepted accounting principles' to create the impression that WorldCom was achieving financial targets set out by CEO at the time, Bernie Ebbers.
It also accuses disgraced ex-WorldCom's controller, David Myers, of directed the 'making of entries he knew were not supported'. Myers was the first executive to plead guilty to fraud charges in relation to the accounting scandal that brought the company to its knees.
His activities were accomplished 'because it was apparently considered acceptable for the General Accounting group to make entries of hundreds of millions of dollars with little or no documentation beyond a verbal or an e-mail directive from senior personnel'.
The report also claimed there was 'clear evidence that Ebbers was aware of certain practices Sullivan and Myers used to inflate reported revenues'.
The report was issued by MCI's board of directors, led by former SEC director of enforcement William McLucas, with the assistance of law firm of Wilmer, Cutler & Pickering and PricewaterhouseCoopers LLP who served as financial advisors.
WorldCom became the largest corporate failure in US history when it filed for bankruptcy in July 2002.
In September 2002, WorldCom's former chief financial officer Scott Sullivan pleaded not guilty to fraud charges.
MCI chairman and CEO Michael Capellas said MIC understood it had a 'responsibility to go above and beyond the legal requirements to regain public trust and confidence'.
'Accordingly, we have cooperated with all investigations to ensure that they specify exactly what happened in the past and identify the root causes of the problems. It is important to us that the record be clear, detailed and readily available to the public.
You may also like
If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.
In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.