The three unnamed transactions, totaling $49 million over six quarters, may have been inappropriately accounted as advertising and commerce revenue. The company said it plans to further review these deals among others at its Internet division, but added that it has not determined whether the accounting was inappropriate or if it will take any action to address any financial improprieties that may be found.
AOL Time Warner Chief Executive Richard Parsons said in a statement that he plans to "implement additional internal controls at AOL" once the company's own investigation is completed.
Notice of this discovery was released in conjunction with AOL Time Warner'sto certify its financial statements following the Sarbanes-Oxley Act of 2002. The new federal law requires top executives publicly traded companies to certify the accuracy of their latest financial statements. For most companies, the deadline to certify financial statements was set for the close of business Wednesday. A few companies, including Dell Computer, Microsoft, Hewlett-Packard and Applied Materials, have deadlines in September to reflect their fiscal years.
As of Wednesday morning, CEOs and CFOs of most tech companies, including Oracle and Siebel Systems, had met their August deadline, according to the SEC.
There are a few stragglers, however. Before the market opened, Comdisco, Compuware, EarthLink, EMC, Level 3 Communications, Nextel Communications, Quantum, Qwest Communications, Sabre Holdings, USA Interactive and XO Communications were among the companies that hadn't yet filed to meet Wednesday's deadline.
Under the Sarbanes-Oxley Act, a CEO or CFO who certifies false financial reports could get up to 20 years in prison and be fined $5 million.
AOL saga opens old dot-com wounds
Regulators are zeroing in
on bad barter deals.
In related news, company spokeswoman Tricia Primrose confirmed that David Colburn, an executive vice president and president of business development for AOL Time Warner, left the company late last week. Primrose would not give a reason for his departure, but a source close to the company said Colburn had been forced out. Colburn, who had overseen the business affairs division of America Online, had already given up control of day-to-day operations in July.
AOL's accounting processes are underby the Securities and Exchange Commission and the Justice Department. The investigation followed reports in the The Washington Post, which raised concerns about AOL's accounting practices in 2000 and 2001. In particular, investigators are looking at how AOL accounted for deals in which products and services were traded for stock rather than cash. Colburn was reportedly behind many of those deals.