US media and entertainment giant AOL Time Warner yesterday
admitted that three previous deals conducted in its America Online
unit may have been improperly accounted in its financial
statements, overstating advertising revenues by $49 million.
The company’s accounting practices are already being
investigated by the US Securities and Exchange Commission and the
Department of Justice. AOL Time Warner was also sued recently by a
group of shareholders for alleged fraud regarding the advertising
revenues at AOL.
AOL Time Warner has not named the companies involved in the
transactions in question, but it said that three payments to AOL
may have been “improperly recognised” as advertising revenue. It
also said that it plans to further investigate deals at its
internet division.
The information was disclosed hours before the Securities and
Exchange Commission’s deadline for US companies to certify the
accuracy of their latest financial statements, as required by a new
federal law.
In a separate statement AOL Time Warner announced that David
Colburn, an executive vice president and president of business
development no longer works for the company. It did not comment on
the circumstances of his departure. Mr Colburn had negotiated
advertising deals and overseen the AOL division.
