AOL top execs to certify financials
The CEO and CFO of AOL Time Warner agree to certify their company's financial statements, just making a federal deadline, according to reports.
The company decided early Wednesday to certify the reports, The Wall Street Journal reported. A new federal law requires the certification and imposes heavy penalties on executives who knowingly certify reports that turn out to be false.
An AOL Time Warner representative would not confirm the decision with CNET News.com but said the company will make an announcement later in the day regarding its plans.
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 under investigation by 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.
A 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 comes at 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, PeopleSoft, 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.
"If company principals do not certify or falsely certify, it is our understanding that the SEC will bring all its investigative tools to bear and make the appropriate referrals to prosecutors," said Alan Wargaski, a bond analyst at CIBC World Markets.