Financial Accounting Blog

Sunday, March 14, 2004

Wall Street Journal Friday March 12,2004:MCI to state fraud was $11 billion
The total accounting fraud will reach over $11 billion because the company has reversed many of its past accounting practices. Current expenses booked as capital spending.
"The telecommunications titan is expected to provide audited financial results for 2000,2001 and 2002 that will reveal the full extent of the largest accounting fraud in U.S. history"

"Mr. Sullivan,facing a possible sentence of as much as 165 years, pleaded guilty last week to illegally manipulating the books. Much of the fraud was committed by moving routine expenses, which are deducted immediately from earnings, into capital spending, which is deducted in stages over long periods."

" Aside from the accounting fraud,MCI has said it plans to write off nearly $80 billion of the $107 billion in assets it had on the books when it entered chapter 11 protection. The value of the assets was inflated by the over heated market for telecommunications, which put to high a value on the company's network and encouraged WorldCom to overpay for many of its nearly 70 acquisitions."