AOL Time Warner investigating potential accounting problems, company acknowledges
Thursday, August 15th 2002, 12:00 am
By: News On 6
NEW YORK (AP) _ AOL Time Warner announced that about $49 million in transactions at its America Online unit may have been booked improperly, in a departure from the company's previous assertions that its accounting was sound.
The company said Wednesday that it was examining the transactions at America Online, whose accounting practices are being scrutinized by federal regulators.
AOL Time Warner said in a statement that the transactions in question occurred from the last quarter of 2000 through the first quarter of this year. The company said it has not made a final determination whether the accounting was proper.
The announcement followed word earlier Wednesday that an executive who negotiated many deals for America Online that are being investigated has left the company.
AOL Time Warner's finances were called into question last month when The Washington Post published a series of articles outlining unusual techniques the AOL division used for accounting revenue, including booking ads sold on behalf of eBay as revenue for itself.
On Wednesday, the company did not describe the three possibly questionable transactions, but said its announcement was based on information that came to light in recent days.
``I am committed to completing our internal review and resolving those questions,'' Richard Parsons, the chief executive of AOL Time Warner, said in a statement.
The amounts involved would be an insignificant portion of the company's overall revenue. However, AOL Time Warner, like other major firms, has been under increased scrutiny due to the recent wave of accounting scandals that have taken down Enron, Adelphia Communications and WorldCom.
Earlier Wednesday, the company said David Colburn, an executive who negotiated many advertising deals for America Online, had left the company last week. The deals are among those being investigated by the Securities and Exchange Commission and the Justice Department.
Company spokesman Jim Whitney declined to discuss the reasons for Colburn's departure, but a source familiar with the matter said Colburn had been forced out and that the company had locked him out of his office.
Colburn could not be reached for comment because he has an unlisted phone number.
Colburn's departure came just days before Wednesday's deadline for corporate executives to vouch for their accounting statements. Parsons said the company had signed the statements.
AOL Time Warner is the world's largest media conglomerate with holdings spanning Time magazine, CNN, Warner Bros. and HBO.