The irregularities, which were discovered during a routine internal audit, involve booking operating costs as capital expenditures and inflating profits and cash flow statements. Although the company did not give details, it said that the transfers under investigation reach the amount of $3.8 billion for the four quarters of 2001 and the first quarter of 2002.
According to WorldCom, the false financial statements were approved by its external auditors, Arthur Andersen. The company replaced Andersen with KPMG last month.
World Com’s accounting practices are being investigated by the US Securities and Exchange Commission, which confirmed yesterday improprieties of “unprecedented magnitude.”
Last night, a spokesman for the company claimed that it remains viable and will continue its operations. He said:
“Our senior management team is shocked by these discoveries. We are committed to operating WorldCom in accordance with the highest ethical standards.”