AOL reveals accounting for barter deals
America Online's problems continued to mount yesterday as it revealed in an SEC filing that it may have improperly recognized $49m in revenue, and that further questionable transactions may yet be uncovered.
The admission came as parent company AOL Time Warner Inc said its CEO Richard Parsons and CFO Wayne Pace had certified the company's results, in line with regulations recently imposed by the US authorities in the wake of recent corporate scandals.
But while Parsons and Pace are standing by the company's figures, problems have emerged at the troubled America Online unit. In its Form 10-Q filing the company revealed that "based on information that it learned within the past 10 days", it had identified three transactions at the AOL unit where it may conclude, after further investigation, that "consideration received by AOL from third parties may have been inappropriately recognized as advertising and commerce revenues." The questionable transactions totaled around $49m over six quarters, the company said.
AOL Time Warner described the amounts as "an insignificant portion of the Company's revenue during these reporting periods." Ominously, though, it said that it is further reviewing the transactions, as well as others at the AOL division relating to advertising and commerce revenues.
Parsons, in a statement yesterday, said that he was committed to resolving questions over the transactions, and added, "We are moving forward to implement additional internal controls at AOL."
AOL has been under a cloud for weeks, after it emerged that the US Securities and Exchange Commission and the US Department of Justice were both probing the company's accounts. The investigations followed a Washington Post article which referred to "unconventional" accounting of some advertising barter deals at the company.