WorldCom to acknowledge more accounting flaws

ITworld.com –

Bankrupt WorldCom Inc. is expected to file a further revision of its financial results to the Securities and Exchange Commission (SEC) on Friday that could add US$2 billion to the $7 billion in accounting errors already disclosed, The Wall Street Journal (WSJ) reported Thursday, citing people close to the situation.

While the exact breakdown isn't yet known, some of the revision may partly relate to the write-down of assets; an unspecified amount is expected also to stem from improper accounting related to consolidation of foreign subsidiaries, according to the report.

People close to the situation cautioned that the $2 billion may be preliminary and change as WorldCom representatives conduct a forensic review of the company's books, WSJ reported. The company is expected to take a massive $50 billion charge related to goodwill; it isn't clear whether a portion of the additional restatement might be part of that charge, according to the report.

The expected addition to the restated numbers will mark the second time WorldCom has added large amounts to the earnings revision that drove the second-largest long-distance company in the U.S. into bankruptcy in July. After the company's announcement of the $3.8 billion in accounting irregularities in June, it added more than $3 billion in restatements in August.

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