The Regents - University of California | Office of The President
The Regents - University of California | Office of The President
The Regents - University of California | Office of The President
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149. In November <strong>of</strong> 2002, WorldCom, Myers and Yates entered into a<br />
settlement agreement with the SEC.<br />
G. Other Restatements Probable<br />
150. On November 5, 2002, WorldCom announced that it will likely report<br />
another $1.8 billion in fraudulent accounting which could bring its total<br />
restatements to more than $9 billion. WorldCom’s Press Release stated:<br />
In settlement discussions with the Securities and<br />
Exchange Commission (SEC), WorldCom advised the<br />
agency that, based on very preliminary reviews <strong>of</strong> past<br />
accounting, it expects an additional restatement <strong>of</strong><br />
earnings which, when added to WorldCom's past<br />
restatements, could total in excess <strong>of</strong> $9 billion.<br />
151. WorldCom did not disclose the reasons for the additional restatement.<br />
Based upon the findings <strong>of</strong> First Interim Report <strong>of</strong> Dick Thornburgh, Bankruptcy<br />
Court Examiner <strong>of</strong> November 4, 2002, it appears that the restatements are the<br />
result <strong>of</strong> further improper accounting by WorldCom <strong>of</strong> its reserves. Additionally,<br />
it appears that WorldCom improperly handled currency exchange issues from its<br />
foreign subsidiaries.<br />
152. On November 11, 2002, WorldCom filed with the Bankruptcy Court<br />
its September 2002 Monthly Operating Report which shows a net loss from<br />
continuing operations <strong>of</strong> $108 million. In connection with the report, WorldCom<br />
stated: “Until WorldCom completes a thorough balance sheet evaluation,<br />
including reviews <strong>of</strong> goodwill, property and equipment, accrual balances and<br />
allowances for doubtful accounts, the Company will not issue a balance sheet or<br />
cash flow statement as part <strong>of</strong> its monthly operating report.”<br />
IX.<br />
ROLE OF ARTHUR ANDERSEN<br />
A. Andersen Earned Millions <strong>of</strong> Dollars in Fees By Providing Audit,<br />
Tax and Consulting Advice to WorldCom for 8 Years<br />
153. Andersen was the purportedly independent auditor for WorldCom<br />
from October 7, 1993 until May 14, 2002. According to WorldCom’s 10-K405 for<br />
year end December 31, 1994 filed on March 30, 1995 with the SEC, WorldCom<br />
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COMPLAINT
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