November 04, 2002, 5:16 PM — Bankrupt telecommunications service provider WorldCom Inc. Monday laid out several steps it has taken to uncover all of its past financial problems and prevent more in the future.
WorldCom has restated past financial results twice this year, to the tune of nearly US$8 billion of reductions in pretax profit, because of improper accounting for periods in the years 2000, 2001 and 2002. The company faces both criminal investigations and civil suits.
The company has made and is still making organizational changes to correct its past problems, prevent them from recurring and to enable its independent auditors to finish reviewing WorldCom's financial statements for 2000, 2001 and 2002, according to a Monday statement.
Also Monday, a preliminary report by an investigator appointed by the U.S. Bankruptcy Court for the Southern District of New York, Richard Thornburgh, was filed with the court, according to the statement. A WorldCom spokeswoman declined to comment on the timing of the company's statement.
The Clinton, Mississippi, company is reforming its financial systems and policies and has made major personnel changes, the statement said. In addition to replacing its chief executive officer and chief financial officer (CFO), and bringing on three new board members, as previously disclosed, WorldCom is doubling its internal audit department staff. The company also has created a special investigative committee of its board, which includes the three new board members.
In addition, WorldCom has created two new operational CFO positions, one for the company's Asia-Pacific business and one for its European operations.
WorldCom's senior management and board have made it clear that sanctions will be taken against any WorldCom employee who doesn't adhere to company policy, the statement said.