WorldCom Considering Reorganization

AP ^ | 7/9/02 | JOHN PORRETTO

[Liz]

.........ping.................

[Aggie Mama]

I don't understand your title.

[kcvl]

bttt

[Lysander]

shares...21 cents Monday.

Thats up 300%--- A day trader can do well with penny stocks!

[marshmallow]

What the dickens is this headline trying to say?

[BamaBlue]

As a former Big 8, 7, 6, 5, 4 accountant (10 years in tax) I find in interesting that Worldcom would blame its outside accountants. Today, in my present job, I was asked to sign a Management Representation Letter, which says in part that no member of executive management knows of or is involved in fraud related to the financial statements under review. This is a standard in todays accounting practices. Yes, it's CYA, but it's a damning statment against Worldcom and all other companies that have committed fraud. It's the inside people not the outside accountants. Anything can be hidden for a certain amount of time.

[Liz]

If you didn't get it from reading the story, I can help you with that. If WC went bust, it'd be 2X larger than Enron, 4X larger then Global X. Comprendez?

[Liz]

I was asked to sign a Management Representation Letter, which says in part that no member of executive management knows of or is involved in fraud related to the financial statements under review. This is a standard in todays accounting practices. Yes, it's CYA, but it's a damning statment against Worldcom and all other companies that have committed fraud. It's the inside people not the outside accountants. Anything can be hidden for a certain amount of time.

Enron hid stuff offshore thru the machinations of its shady CFO Fastow. But in any case, SOP is for CEO's to sign off on the financial details. Apparently, these characters did so whether the details were true or not.

[Liz]

....shares........21 cents Monday.

Thats up 300%--- A day trader can do well with penny stocks!

LOL. Good one.

[Liz]

See my post #8. Or reread the article.

[BamaBlue]

Agree - My point is, and only is, that management has the responsibility for the financial statements, not the outside accountants. I do believe Andersen has some blame but not to the degree that management has. Again, anyone can hide the truth for a period of time. Eventually it will be found out.

[marshmallow]

I do understand now. Someone has edited the title.

[McGavin999]

What you're missing with the Enron thing is that they paid AA $25 million for audits, paid AA $27 million for financial consulting, most of the Enron financial department was comprised of former AA employees (including the CFO). In that particular case, I think AA was more than just a little complicite.

[BamaBlue]

I don't disagree with you. The money in public accounting has gotten out of hand. Regretfully auditing has become a commodity and the accounting firms have had to go to other means to make money. Therefore the lowest common denominator in accounting is the audit. The tax and consulting areas of public accounting are where the money is to be made. Nonetheless, I stand by my statement that the management of the company is responsible for the financial statements of that company.

[HiTech RedNeck]

It's a small WorldCom after all,
It's a small WorldCom after all,
It's a small WorldCom after all,
It's a small small WorldCom

[Young Werther]

I was temping at a dot.com related company and was performing cash reconciliation for their upcoming IPO. The controller position was open and when I expressed an interest I was told that the job required a CPA.

What I found was a total lack of plain old Bookkeeing 101. Example, collect checks from customer, deposit in bank and then "forget" to record it in the General Journal!!! They were factoring their receivables at an 8% rate while they had $250,000 in the bank that they didn't know about. Bank recons. None done for over 18 months!!!

I've seen it all. Poor ol' me. Just a dumb old MBA with lots of "accounting" experience but no CPA so no recognition. Oh I do know and understand GAAP but that ain't worth a damn if you want to cook the books!

[Ernest_at_the_Beach]

Liz didn't do the title, the news service did. Reorganization in Business circles is Bankruptcy!

[clikker]

Hmmm... I'm confused here. They want to give the bondholders and creditors worthless stock? Is that supposed to be their plan?

Perhaps they should just file a Chapter 7 bankruptcy, and liquidate the whole thing. Have a garage sale -- just sell it all off to whoever wants it. Seems like that might be the quickest and cleanest way to handle this mess...

[Skip Ripley]

The pop on WCOME was the ride from .06 to .27. Anyone left in now is a sucker because you can bet they'll file a prepackaged chapter 11 that wipes out the common and preferred shares.

Global Crossing and Williams Communications did this number already