NEW YORK (CNN/Money) -
WorldCom Inc. said Thursday it discovered another $3.3 billion in accounting irregularities on top of the $3.8 billion it announced in June, a disclosure that galvanized lawmakers and regulators to move to end abuses in corporate America.
WorldCom, which filed for bankruptcy after disclosing its first accounting errors, said it is continuing its internal financial investigation. The company said the newest discovery was made as it reviewed its books for 1999 and 2000, with most of the bogus tally coming in 2000.
As a result, WorldCom says it will restate its finances for all of 2000. The company already has said it will restate its finances for all of 2001 and the first quarter of 2002.
The once fast-growing long-distance and Internet services company filed the biggest bankruptcy in U.S. history last month after disclosing the accounting abuses, moves that led to passage of tough new laws meant to curb corporate fraud and hold chief executives more accountable for how their companies are run.
Last week, two former WorldCom executives -- chief financial officer Scott Sullivan and controller David Myers -- were arrested and charged with hiding the $3.8 billion in expenses and lying to investors and regulators in a desperate bid to keep the company afloat.
In its statement Thursday, WorldCom also warned that more restatements may be coming, and that it may write off as much as $50.6 billion in goodwill and other intangible assets when restated results are released for 2000, 2001 and 2002.
It did not provide details of how the latest errors occurred. The $3.8 billion revealed in June came from expenses that were accounted for as long-term costs that could be deducted against earnings gradually, instead of being deducted as they were incurred.
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In the latest case, the Wall Street Journal, which reported earlier Thursday that more errors would be disclosed by WorldCom, said the company used various techniques to bolster earnings, including reversing special reserve funds that companies set aside to help pay future costs.
WorldCom's original disclosure cast it into the top tier of scandal-ridden companies, alongside Tyco, Global Crossing, Adelphia Communications and, of course, Enron. The disclosure also re-energized Congress, and many on Wall Street, to push for tougher reforms, resulting in the bill President Bush signed into law last month.
Bernard Ebbers, who thought up the idea for the company with his co-founders in a Mississippi coffee shop and built it into the nation's No. 2 long-distance company, resigned in April and was succeeded by John Sidgmore the next day.
About six weeks later, Sidgmore announced 17,000 layoffs. Not long afterward, the company revealed the first accounting errors, prompting the Securities and Exchange Commission to file civil charges and call the accounting fraud "unprecedented."
(For more dates and facts about WorldCom's history, click here).
Ebbers, along with Sullivan, declined to testify before the House Financial Services Committee, which held hearings last month.
WorldCom said the newly disclosed amounts have been reported to the SEC and other authorities investigating the company. A source familiar with the investigation said while WorldCom had warned the agency, it had not provided much detail on the matter.
An SEC spokesman declined to comment.
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