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Technology Stocks : WCOM -- Ignore unavailable to you. Want to Upgrade?

To: HH who wrote (10953)	6/27/2002 1:17:28 PM
From: JakeStraw	Respond to of 11568

Any other corporations that used the "services" of AA are likely to be eye-balled now... It's more than a coincidence that comapnies such as Enron & Worldcom used them...

To: HH who wrote (10953)	6/27/2002 3:30:27 PM
From: Oeconomicus	Read Replies (2) \| Respond to of 11568

A "routine" examination found it. It just smacks of the culpability of executives and professional auditors that they must have really went out of their way not to have "routine" examinations in the past. Actually, from what I've read, no one at WCOM tried to hide the decision as to how to book the expenses. It was simply a decision, however wrong, made by the SVP/Controller and the CFO that their treatment was appropriate. An internal auditor, probably reviewing a whole lot of transactions and journal entries (the "routine" part), felt that the treatment was not appropriate and brought it to the attention of the audit committee of the board, which is his/her job. The audit committee then, quite appropriately, told the new outside auditors. When the auditors and the board determined that Sullivan's treatment was, in fact, wrong and that it would have a seriously negative impact on the company, the board took appropriate action - can Sullivan and the controller, disclose the matter publicly and correct the books. Whether Sullivan is guilty of deceit or just very bad judgement, the process worked as it should. That's why large companies have internal auditors reporting to the board to begin with - it's all checks and balances, if you'll forgive the pun. Regards, Bob PS: None of this helps us, of course, unless the banks feel as I do that their chances of repayment are better keeping the company out of bankruptcy. We'll see... eventually. PPS: As for Andersen, I agree that there is no excuse for them not catching this. Actually, I doubt they missed it at all, but rather someone high enough at Andersen to make such a call agreed with Sullivan (however much they had to contort logic and the rules to rationalize it) and they just went along.