NEW YORK (CNN/Money) - WorldCom's CEO lashed out Monday against Arthur Andersen, the auditor who for 15 months signed off on the telecommunications company's overstated profit reports.

The CEO, John Sidgmore, was joined by WorldCom chairman Bert Roberts in questioning how the auditor missed more than $3.8 billion dollars in hidden expenses.

"I am extremely puzzled that this wrongdoing was not discovered by Arthur Andersen," Sidgmore told a panel of federal lawmakers angered by Corporate America's widening accounting scandals.

The House Financial Services Committee was earlier unable to question two former executives who led WorldCom while it overstated earnings.

Bernard Ebbers, who ran WorldCom through April, exercised his Fifth Amendment right against self-incrimination. Scott Sullivan, fired as WorldCom's chief financial officer on the same day it dropped its accounting bombshell, also took the Fifth.

Their silence met outrage from members of the House Financial Services Committee probing a scandal that cost investors billions of dollars and could bankrupt the No. 2 long-distance phone-service provider.

The accounting firm in a statement defended its WorldCom work, placing blame back on Sullivan, the former CFO.

"It is of great concern that important information about line costs was withheld from Andersen auditors by the chief financial officer of WorldCom," said the statement from Andersen.

Andersen was found guilty in June of obstucting justice after destroying materials related to its audit of Enron, which overstated profits before going bankrupt in December.

The hearing came as President Bush in a speech Tuesday is expected to call for criminal penalties -- including jail time -- for corporate leaders who knowingly misreport their companies' earnings. The president has been criticized in recent days for what some Democrats and others call a lack of leadership and moral authority on the issue.

The House panel questioned the accountant who signed off on WorldCom's books and a high-profile analyst who touted the company's stock as it tumbled from more than $60 a share.

The analyst, Jack Grubman of Salomon Smith Barney, said he had no advance knowledge of any fraud when he cut his rating on WorldCom (WCOME: Research, Estimates) days before the company announced the accounting scandal.

"That speculation is categorically false," said Grubman, who, like many of his colleagues, did not forecast the timing and depth of the telecom industry's collapse.

Grubman was asked about his relationships with Ebbers and his attendance at three board meetings held by WorldCom, an investment banking client of Salomon's.

"This is an important issue," said Grubman, who nonetheless said the opinions of analysts working for investment banks can be independent.

A Salomon Smith Barney spokesman said Grubman's appearance at WorldCom's board meetings was in accordance with SEC rules and guidelines.

"Jack was there to answer questions regarding likely investor reaction to the proposed deals," Arda Nazerian, the Salomon Smith Barney spokeswoman, said.

Before taking the Fifth, Ebbers, who resigned in April, said, "I do not believe I have anything to hide."

But Max Sandlin, D-Texas, asked the House committee to hold Ebbers in contempt for his refusal while making what Sandlin referred to as a self-serving statement.

Few revelations came from Arthur Andersen.

Melvin Dick, former senior global managing partner at Andersen, faced questions about what, looking back, he should have seen in WorldCom's financial statements.

"We did the appropriate tests under generally accepted accounting standards," Dick said.

WorldCom in a SEC filing Monday said Sullivan tried to postpone news of the overstated results.

Internal auditor Cynthia Cooper began a review of the company's capital expenditures and capital accounts in May. That audit had been scheduled for the third quarter 2002, but she advanced it, the company said in the filing.

WorldCom former Chief Financial Officer Scott Sullivan asked her on June 11 to delay the review when confronted with questionable transfers to the company's capital accounts, but Cooper continued the audit, the statement said.

In opening remarks, Michael Oxley, the Ohio Republican who chairs the House committee, called the WorldCom incident the latest "decline of ethics in American culture during the 1990s." Those responsible "owe this committee and the public a thorough investigation," Oxley said.

He was echoed by John J. LaFalce, a New York Democrat. "The imperative of meeting analysts' quarterly projections has trumped the need of shareholders," he said.

Calling new legislation mandatory, LaFalce said auditors and boards of directors have failed as watchdogs. "The health of our economy depends on our actions," he said.

"This cowboy capitalism must stop," said Maxine Waters, a California Democrat.

With members of Congress facing re-election this November, the hearings are sure to become politicized. Many American voters have lost big savings in a stock market battered by the accounting scandals that began with Enron last year. The Nasdaq composite index fell to a five-year low last week.

The latest setback came from Merck & Co., which late Friday said that more than $14 billion, or 10 percent, of revenue reported since 1999 was never actually collected by the company.

Clinton, Miss.-based WorldCom late last month said an internal audit found it overstated cash flow by $3.8 billion by disguising regular operating expenses as long-term capital expenditures during a 15-month period ended in March.

The disclosure threatens to bankrupt the company, financial analysts have said. WorldCom has fired 17,000 workers and faces client defections. Its stock now trades for pennies. Struggling to pay off some $30 billion in debt, WorldCom wants to sell assets. It has defaulted on some loans.

In his comments, WolrdCom CEO Sidgmore repeated vows to provide all available details to the many investigators looking into his company.

"We are working hard to maintain your trust," he said. "I cannot change the past, but I am responsible to what we do now and in the future."

Sidgmore, a board member who signed on as CEO in April, has tried to distance himself from the former executives. He's cast the survival of the telecommunications company, which carries a large chunk of Internet traffic, as part of the national interest.

With its probe, Congress joins the Justice Department and the Securities and Exchange Commission, which has charged WorldCom with fraud.

Click here to read the congressional subpoenas.

The majority leader of the Senate, Tom Daschle, (D-S.D.) last weekend once again criticized Harvey Pitt, the chairman of the SEC, who has been dogged by accusations of being too tight with the accounting profession.

But Bernie Sanders, a Vermont Independent, cast the blame toward his colleagues, whose campaigns collect million of dollars from corporations trying to buy influence and access. "Let's limit the amount to money that can be collected and spent on elections," Sanders said.

Lawmakers have been frustrated by corporate probes before. Most of the Enron executives who appeared before Congress earlier this year also declined to testify. The exception, former Enron CEO Jeffrey Skilling, told congressional investigators he knew nothing of any of the dealings that led to the collapse of the energy trader.

"You will possibly get away with it," said Michael E. Capuano, a Massachusetts Democrat, addressing Ebbers, Sullivan, Grubman and Dick. "What kind of message will that send to America?"