Two days ago, we heard about the giant accounting fraud committed by WorldCom.
Mike Cassidy, from the San Jose Mercury News, wrote about it and pioneered a new expression -- at least, new for me.
As a measure of my business acumen, I offer this fact: Just Saturday, I handed over my Visa number to MCI WorldCom to save myself the trouble of writing a monthly check to the long-distance phone company.
Two days later, WorldCom Enroned.
I like this new word.
By the way, if you want to know how the CFO -- and probably other executives -- manage this huge fraud, you can read this BusinessWeek article: How to Hide $3.8 Billion in Expenses.
Here is the punch line.
If there is a silver lining in the WorldCom fiasco, it's that this sort of accounting fraud can be uncovered quite easily -- you just need accountants who are looking for it.
And today, another accounting scandal appeared at Xerox. Here is the beginning of an article from InfoWorld, "Xerox reduces 1997-2001 income by $1.4 billion".
The wildfire of accounting controversies engulfing Enron and tech-sector companies such as WorldCom is scorching another company Friday as Xerox announced that it would have to restate its 1997 to 2001 earnings due to accounting irregularities, a move that will reduce the company's pretax income over that period by $1.4 billion.
A report in Friday's Wall Street Journal quoting sources close to the situation said that an audit that included 2001 results could boost a total restatement of company financials since 1997 to more than $6 billion.
Isn't time to get better news? Have a nice weekend.
Sources: Mike Cassidy, San Jose Mercury News, June 27, 2002; Peter Elstrom, BusinessWeek Online, June 28, 2002; Sam Costello, InfoWorld, June 28, 2002
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