The firm pointed the finger at the recently resigned CFO Sullivan, as telecom company WorldCom stated it would have to restate its financial results to account for billions of dollars in improper bookkeeping.
An Andersen statement, read: ‘Our work for Worldcom complied with SEC and professional standards at all times. It is of great concern that important information about line costs was withheld from Andersen auditors by the chief financial officer of Worldcom.
‘The WorldCom CFO did not tell Andersen about the line cost transfers nor did he consult with Andersen about the accounting treatment. Upon recently learning of the transfers, Andersen conferred with the WorldCom audit committee and new management, and advised the company that WorldCom’s financial statements for 2001 should not be relied upon.’
The timing of the WorldCom disaster could not have come at a worse time for Andersen, which has splintered globally following the Enron fiasco.
Andersen signed WorldCom’s most recent set of accounts, covering the year up to 31 December 2001, in March this year. WorldComs’s chief executive, Bernard Ebbers, left the company under a cloud just two months ago.
In a statement released by WorldCom, it said it had fired chief financial officer Scott Sullivan and has accepted the resignation of David Myers, senior vice president and controller.
The company said an internal audit showed that transfers of $3.055 billion for 2001 and $797 million for the first quarter of 2002 were not made in accordance with generally accepted accounting principles.
WorldCom said restating these improper transfers would cut earnings to $6.339 billion for 2001 and $1.368 billion for the first quarter of 2002.
It added it has asked its new auditors KPMG – Andersen was sacked by the company this year – to undertake a comprehensive audit of the company’s financial statements for 2001 and 2002, and will reissue these statements.
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