WorldCom Inc.'s audit committee has uncovered what could be one of the largest accounting frauds in history with the discovery of $3.6 billion in expenses that were improperly booked as capital expenditures, a financial gimmick that boosted the company's cash flow and profit over the past five quarters, according to people familiar with the situation. WorldCom, Clinton, Miss., said the discovery will result in a restatement of earnings for 2001 and the first quarter of 2002. Without the improperly booked expenses, which the company said weren't in accordance with generally accepted accounting principles, the company's reported earnings before interest, taxes, depreciation and amortization, or Ebitda, would be reduced to $6.339 billion for full-year 2001 and $1.368 billion for the first quarter of 2002 and would have resulted in a loss for those periods. The company is planning to issue new audited financial statements for all required periods after it completes an audit.
That restatement could be the largest in corporate history. WorldCom has since fired its longtime chief financial officer, Scott Sullivan, according to people familiar with the matter.--------
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Might this be the push we need to really clear the decks?
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