(b) The company also improperly transferred certain costs to its capital accounts; thereby WorldCom’s transfer of its costs to its capital accounts violated the established standards of generally accepted accounting principles (GAAP). As a result, WorldCom falsely portrayed itself as a profitable business during 2001 and the first quarter of 2002. WorldCom’s improper transfer of certain costs to its capital accounts was not disclosed to investors in a timely fashion, and misled investors about WorldCom’s reported earnings.
