The recent allegations regarding Worldcom do not surprise me. It is so easy to hide/defer expenses or assets on audited statements, it is unbelievable.
I have worked for two large companies (both owned by shareholders) whereas the books were not entirely accurate.
One company did not even have a balanced balance sheet. Their auditors were none other than Arthur Andersen (hence Enron fame). My first question to the CFO (shortly after being hired) was "How/why were these statements approved by the auditors?". His response, "They want our international business & are willing to overlook certain irregularities". "No shit" was my reply. He laughed.
Another company I briefly worked for (a major Canadian bank), was involved in a half billion dollar merger (they bought an investment firm). The share transaction process was handled via a written set of books! No lie! The whole process was done via hand written ledgers and they had no idea how to balance the variances (it was a major hassle & was to my knowledge, written off).
I'm not here to say that all large firms are corrupt, it is just easier to hide potential liabilities than it is for smaller firms, due to the amount of dollars that are involved (it takes a lot of time to do forensic accounting - A small firm can be analysed fairly quickly by the in-house or newly hired accountant).
Hopefully, the Worldcom experience will enlighten the public that if you are willing to invest in a company, you need to look at who their auditors are - And hopefully, this will bring a lot more credibility to auditors (I do not intnend to offend auditors- It's a tough job to perform - A very tough job!).
So to hear about Worldcom and it's accounting irregularities is no surprise to me. The bigger they are, the easier it is to hide the bullshit.
I have worked for two large companies (both owned by shareholders) whereas the books were not entirely accurate.
One company did not even have a balanced balance sheet. Their auditors were none other than Arthur Andersen (hence Enron fame). My first question to the CFO (shortly after being hired) was "How/why were these statements approved by the auditors?". His response, "They want our international business & are willing to overlook certain irregularities". "No shit" was my reply. He laughed.
Another company I briefly worked for (a major Canadian bank), was involved in a half billion dollar merger (they bought an investment firm). The share transaction process was handled via a written set of books! No lie! The whole process was done via hand written ledgers and they had no idea how to balance the variances (it was a major hassle & was to my knowledge, written off).
I'm not here to say that all large firms are corrupt, it is just easier to hide potential liabilities than it is for smaller firms, due to the amount of dollars that are involved (it takes a lot of time to do forensic accounting - A small firm can be analysed fairly quickly by the in-house or newly hired accountant).
Hopefully, the Worldcom experience will enlighten the public that if you are willing to invest in a company, you need to look at who their auditors are - And hopefully, this will bring a lot more credibility to auditors (I do not intnend to offend auditors- It's a tough job to perform - A very tough job!).
So to hear about Worldcom and it's accounting irregularities is no surprise to me. The bigger they are, the easier it is to hide the bullshit.
