FBI and SEC Will Investigate Global Crossing's Accounting

The Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) are investigating the accounting practices at Global Crossing, the telecommunications company that filed the fourth largest corporate bankruptcy in U.S. history last month. Andersen is the auditor for Global Crossing.

The SEC has asked Global Crossing to hand over documents as well as a letter written by a former employee allegedly describing accounting practices of reporting pro forma values for cash revenue and adjusted earnings before interest, taxes, depreciation and amortization.

In addition, it was discovered last Friday that Global Crossing had eased terms on $18 million in loans to two top executives just before the company filed for bankruptcy in January.

Although the FBI's role in the Global Crossing investigation has not been made clear, legal experts speculate that there is evidence of criminal activity which spurred the agency into action. "The FBI's general mandate in these kind of cases is not to get into it until after the SEC has concluded its investigations," said Martin Pollner, a senior partner with the New York law firm of Loeb & Loeb and the former head of law enforcement for the U.S. Treasury department. "However, if there are allegations of extortion or bribery, the FBI steps in very quickly, that's their jurisdiction."

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.