Has WorldCom answered all questions?

Telecoms giant WorldCom has submitted a sworn statement to the US stock market watchdog, the Securities and Exchange Commission, to explain its $3.8bn accounting fraud. BBC News Online examines whether we are any wiser.

Remind me, what went wrong?

The alleged fraud at WorldCom was quite simple, really.

When a company spends money on maintenance and suchlike, it counts as running costs. This is booked every month and counted against profits.

However, when a company invests in big equipment it is booked as capital expenditure, and accounted in small portions over several years - and does not hit profits that much or at least not that quickly.

It appears that WorldCom simply booked running costs as capital expenditure, thus turning a huge operating loss into a tidy profit.

This happened during 2001 and the first three month of 2002, although WorldCom itself now wants to probe the two previous years as well.

So who cooked the books?

Well, we know who WorldCom's current management team says cooked the books, or failed to stop the cooking.

The company says it has identified three culprits.

• Scott D Sullivan, WorldCom's chief financial officer. Mr Sullivan has been fired.<
• David F Myers, senior vice president and controller of WorldCom. He assisted Mr Sullivan in the preparation of the financial statements, and resigned when confronted by the company's audit board.
• Andersen, the accountancy firm, and since the Enron scandal everybody's favourite corporate punch bag. The company says it would not have approved Mr Sullivan's creative accounting. But when asked why it didn't spot the tricks, Andersen is said to have "declined to respond".

And what about the rest of the firm, why didn't they do anything?

Ah... now this is a tricky issue. WorldCom's sworn statement to the SEC is rather vague on this point.

It documents in detail all actions from the point when two WorldCom employees, Ms Cynthia Cooper and Glyn Smith, say they discovered the irregularities - which was some time in May.

There is quite a bit of detail about who was informed where and when about the spot of bother. A flurry of internal meetings culminated on 24 June, when the company board told Mr Sullivan and Mr Myers to resign or be sacked.

On the afternoon of the next day, WorldCom notified the SEC of its black hole. A few hours later it informed the stock market.

But we don't really learn anything about how the fraud was committed, when it began, and who else was in the know apart from Mr Sullivan and Mr Myers.

WorldCom simply says that "the company's own review of those circumstances necessarily has been limited".

The biggest question is whether Bernie Ebbers - until May the chief executive and colourful driving force of WorldCom - was somehow in the know.

So what's going to happen next?

For starters, the SEC is hopping mad. It says that WorldCom's statement is "wholly inadequate and incomplete".

And so the real investigation is only about to begin.

Well, let's make that four investigations - at least.

• WorldCom has promised a comprehensive internal audit of its books.
• The company has also commissioned an independent investigation into its accounting practices.
• The Securities and Exchange Commission has already filed a civil suit and is conducting its own investigation.
• Several committees of the US Congress have promised to hold special hearings, or expand hearings into the Enron scandal to look at WorldCom as well.

And what about the shareholders?

Uh-oh ... that doesn't look too good. WorldCom's shares have just started trading again, but on Monday alone they fell 90%, to just seven cents. Three years ago they traded at $64.

By the end of the week, its shares may be delisted from the Nasdaq stock exchange. It may be a touch too late to bail out of the stock.

Any other bad news?

Ok, if you really want to hear it. WorldCom now has defaulted on $4.25bn of its $30bn debt.

Creditors can start legal proceedings and try to recover their money from whatever is left of the company.

In all likelihood, WorldCom should find itself in a bankruptcy court pretty soon.

So it's all over?

Not so fast.

WorldCom is likely to get bankruptcy protection. And many of its businesses are actually quite profitable. It's just that WorldCom piled up too many debts during its years of rapid expansion.

If WorldCom is sold off in bits, some of that money could be recovered.