Investigators and investors will scrutinize a report to be made public today that is expected to explain WorldCom's alleged accounting fraud.

        The Securities and Exchange Commission demanded the report from WorldCom last week, after the company revealed Tuesday that it hid $3.9 billion in expenses in 2001 and in the first quarter of 2002.

        “If there's even an iota of false statement in there, people are going to pay heavily,” SEC Chairman Harvey Pitt said Sunday on ABC's “This Week.”

        It is unclear if the report will go beyond the periods in question.

        “The worst could be yet to come,” says Robert Willens, Lehman Bros. accounting expert.

        If WorldCom's woes worsen, so will pressure for it to file for bankruptcy court protection, sell assets or pledge them in exchange for new loans.

        Banks that made $2.65 billion in unsecured loans to WorldCom have contacted investors and competitors to gauge interest in WorldCom's consumer, business and fiber-optic networks.

        Telecom firm IDT is considering paying $3 billion to $4 billion for WorldCom's MFS unit, Reuters reported Friday. That comes as some 30 creditor banks, led by Citigroup and Deutsche Bank, try to limit losses from a possible bankruptcy filing by WorldCom.

        The SEC asked WorldCom to explain, under oath, the “circumstances and specifics” behind its admission that improper accounting turned losses into $1.5 billion in profits over the past five quarters. Finance chief Scott Sullivan was fired; controller David Myers resigned. WorldCom spokesman Brad Burns said he doesn't know what the report, due at 8 a.m. ET, says.

        The SEC on Wednesday filed fraud charges against WorldCom. A federal judge on Friday ordered WorldCom to preserve evidence and said it would appoint a monitor to oversee compensation paid by WorldCom to prevent “unjust enrichment.”

        Pitt has been criticized for not doing more. Investor panic that began with Enron spread as Global Crossing, Qwest Communications, Xerox, Tyco and ImClone begat their own scandals. WorldCom also faces an SEC probe of other accounting matters and of $408 million it loaned to former CEO Bernie Ebbers.

        President Bush said in a Saturday radio address that laws are needed to “restore faith in the integrity of American business.”

        A Congressional hearing on WorldCom is set for July 8; other lawmakers are asking for its financial records.

ECKBERG: Why not just blow off work?
Ace your annual review
Employers address changing demographics
Help colleagues understand and embrace new technology
Economy, scandals may keep Fed from raising rates
IRS may allow insurance cost rollover
States face budget urgencies
Six Sigma program becomes business darling
WorldCom report will face scrutiny
WorldCom woes leave Clinton sad but determined
Making it
Morning Memo