The Regents - University of California | Office of The President

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E. 2000 Financial Statements ................................19
1. First Quarter 2000 ..................................19
2. Second Quarter 2000 ...............................20
3. Third Quarter 2000 .................................21
4. Fourth Quarter and Year End 2000 ....................23
F. 2001 ..................................................26
1. First Quarter 2001 ..................................26
2. Second Quarter 2001 ...............................28
3. Third Quarter 2001 .................................30
4. Fourth Quarter and Year End 2001 ....................31
G. First Quarter 2002 .......................................34
VI. WORLDCOM’S STOCK ......................................36
VII. THE FRAUDULENT SCHEME ................................37
A. Improper Accounting for Reserves ..........................40
B. Improper Accounting for Line Costs ........................41
C. Other Accounting Irregularities ............................42
VIII. THE FRAUD IS DISCOVERED AND THE COMPANY RESTATES
ITS FINANCIAL STATEMENTS ...............................42
A. Internal Audit and Audit Committee Meetings ................43
B. The Internal Audit Discovers that WorldCom Executives
Intentionally Inflated the Revenues .........................45
C. Andersen States 2001 Financials Not Prepared in Accordance with
GAAP and Cannot Be Relied Upon .........................48
D. June 25, 2002 Announcement of Restatement .................49
E. August 8, 2002 Announcement of Additional Restatement ......50
F. Criminal and SEC Charges Against WorldCom Executives ......52
G. Other Restatements Probable ..............................54
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COMPLAINT