Florham Park, N.J. (May 4, 2004) – Following Friday’s announcement that Global Crossing’s auditor, Grant Thornton, was withdrawing its audit reports, the telecommunications company’s audit committee retained both Deloitte & Touche and GT to look into its accounting – all while facing a notice from the Nasdaq threatening the de-listing of its stock.
While Deloitte & Touche will conduct an independent review of the company’s cost of access liabilities and cost of access expenses, as well as the related internal control environment, the audit committee has asked Grant Thornton to examine Global Crossing’s procedures to determine whether it can reissue its withdrawn audits.
GT had withdrawn the audit reports after the telecommunications company said that it would restate its results for fiscal 2003 and 2002 due to concerns about the adequacy of its accrued cost of access liability.
Global Crossing last week said that the concerns were raised by its management while it was preparing its financial statements for the first quarter of 2004. The company is still reviewing its financial statements. Cost of access includes usage-based charges paid to other carriers to originate and terminate voice services, leased-line charges for dedicated facilities and local loop charges, and usage-based Internet peering charges.
Global Crossing said that a preliminary review showed that it understated its accrued cost of access liability at year-end 2003 by between $50 million and $80 million. The company said that most of the understatement was the result of incorrect estimates of cost of access expenses and the failure to reconcile the expenses to vendor invoices.
Due to the issues raised about the company’s accounting, the Nasdaq sent it a staff determination on April 29, stating that its common stock was not in compliance with the exchange’s filing requirements, and would be de-listed unless the company requested a hearing with a Listing Qualifications Panel.
Global Crossing said in a statement that it planned to request a hearing soon, and was “hopeful that it will have sufficient time to complete its review and return to compliance.”
Due to the noncompliance, the company’s trading symbol was changed from GLBC to BLBCE.
-- WebCPA staff
