RE: [CANSLIM] WCOM restatement

From: "Duke Miller" <dukemill@tampabay.rr.com>
Subject: RE: [CANSLIM] WCOM restatement
Date: Sat, 29 Jun 2002 17:40:44 -0400
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Tom:

You would hope that in a "profession," the first thing the professional
subscribes to is the trait that nowadays, unfortunately, is more the
exception than the norm.  It's called integrity. Company-wide at
Andersen? Yes.  However, each and every one of them had the power (and
freedom) to walk away. But they didn't, because they worked for the then
almighty Andersen. 

Duke

PS: My analogy to a worm virus is tongue in cheek.  What I really think
is if they did get jobs elsewhere, they're so between the lines it's
silly.



- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: Saturday, June 29, 2002 4:01 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] WCOM restatement


Duke, I will be my usual optimistic self and hope you are wrong. While
the potential is there for former Andersen auditors to perpetuate their
past shady practices onto their new employers, I think the opposite is
more likely. The new employer, assuming they are ethical and not hiring
them simply to learn new Andersen style tricks, knows where the new
auditor came from, and should make it clear that they abide by GAAP.

From the continuing string of massive corporate failures and scandals,
most of whom used Andersen, it is clear to me that this was a company
wide problem, not one limited to a single office. I choose to believe
that most of the Andersen employees were honest, decent, professionals
that knew the rules, but were forced into shady practices either by
pressure from top management, or by the persuasive influence of the
senior managers and auditors saying what they were doing was ok.

- ----- Original Message -----
From: "Duke Miller" <dukemill@tampabay.rr.com>
To: <canslim@lists.xmission.com>
Sent: Saturday, June 29, 2002 3:03 PM
Subject: RE: [CANSLIM] WCOM restatement


I have run an audited company and sat on the board of directors of one.
Several years prior to selling the former, we were advised of the
necessity to have a Big 8 audit in place in the event of a sale.
Especially (as ended up the case) if a publicly traded company should be
the suitor. The reason you MUST have a Big 8 audit, we were advised? For
the sole purpose of validation and authentication of the numbers.

That validation came easy, because the Big 8 firm provided much needed
"guidance"; all we gave them was our sales and expenditures. The
guidance ensured that our CFO recorded the sales and expenses and
arrived at profit statements that, beyond any doubt and without
question, CONFORMED to GAAP.

Andersen is GUILTY of cooking the books in collusion with WCOM's CFO.

Will having a list of Andersen's clients for the past three years help
us?  I thought so earlier this week when I started this string before
going out of town.  However, Thursday, in the middle of an endless
speech by God knows who during my son's college orientation, a
frightening thought occurred to me:  All those crooked little
Andersenites, with all the stealth of a worm virus, have infiltrated
hundreds of firms, KPMG among them. Now they're everywhere!

Must proceed with reading more. You guys must have had a field day while
I was gone: 118 messages to go!!

It's so good to be back.

Duke



- -----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of Tom Worley
Sent: Wednesday, June 26, 2002 9:30 PM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] WCOM restatement


I saw several reports that indicated they (WCOM) failed to follow GAAP.
I also saw one report in which Andersen defended themselves by saying
they didn't know what the CFO had done because they only looked at what
the CFO gave them (funny, I thought that was the job of the auditor, to
look at and investigate everything to be sure that all decisions taken
throughout the year were done correctly and according to GAAP, isn't
that why we call it an "audit" instead of a "rubber stamp party"??).

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Wednesday, June 26, 2002 9:28 AM
Subject: Re: [CANSLIM] WCOM restatement


Tom:

     I've heard on TV that it wasn't a "deviation" from GAAP.  From what
I understand, there are options that an accountant/bookkeeper can use,
and Anderson chose capital expensing what normally would be a regular
expense item.

     In my opinion, it was just a matter of time before such horrendous
manipulation of any company's books was discovered (The question isn't
why did it take so long to discover, but rather, what company will be
the next to reveal that they falsified records.  And I wouldn't be at
all surprised that there are a lot of them out there.)

     Unfortunately, accountants have learned from lawyers how to
obfuscate the truth and maneuver the justice system in order that lying
can be put in the best possible light, and truth and accuracy can be
avoided.  That's why GAAP (I believe) covered up (instead of revealing)
WorldCom's problems.

     As for CANSLIM:  I wonder how WON believes we can now fundamentally
analyze a company-especially after its been revealed that WorldCom's
Cash-Flow is bogus.  A few weeks ago, WON said: Look at the cash-flow to
see that earnings are really funneling down-into the bottom line.  Now
what's he going to say?  Probably, look at the managers of the companies
to see if they have a history of dishonesty.

     Unfortunately, though, I don't believe that will cut it.  Even if
the manager is scrupulously honest, Enron and WorldCom teach us that
that is not enough.  The ACCOUNTANTS also must be honest.  So now will
WON's injunction be to:  Look at the history of the accounting firm, and
the history of the accountants employed by the accounting firm, who work
on the company's books?

jans




In a message dated 6/26/2002 12:53:51 AM Eastern Daylight Time,
stkguru@bellsouth.net writes:

<< once again, Andersen strikes again, this time by signing off on
Worldcom  hiding over $3 billion in expenses as capital expenditures,
and thus  inflating cash flow. Restatement expected to take away last
five quarters of  profits and turn them into losses.





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