AOL Time Warner disclosed yesterday the US Securities and Exchange Commission (SEC) was examining the company's accounting of a series of transactions that may have improperly inflated revenues.
AOL Time Warner chief executive Mr Richard Parsons said the SEC was conducting a "fact-finding" inquiry into several transactions that were reported last week in the Washington Post.
The Postreported AOL made an unusual deal to allow a British entertainment company buy advertising instead of paying an arbitration award in a legal dispute, shifted revenue from one division to another, and sold ads on behalf of eBay and booked them as its own revenue.
Mr Parsons did not elaborate on the transactions, but said the company was co-operating with the SEC. He also repeated AOL Time Warner's assertion that its auditors, Ernst & Young, had signed off on all of the transactions and that they all conformed with generally accepted accounting procedures.
AP