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AOL Inquiries Set To Continue

Nov 15, 2002 | FT.COM

The government inquiries into accounting at AOL Time Warner's online division will continue into 2003, the company said yesterday in a filing.

The Securities and Exchange Commission and the Department of Justice launched inquiries this summer into the AOL division's online advertising deals. AOL Time Warner has never set a date when it expects the inquiries to be completed.

That the government inquiry could drag into next year is not a surprise given the usual pace of such investigations, analysts said.

An AOL Time Warner spokeswoman said the company could not comment on the inquiries.

The media giant has launched an internal inquiry into the advertising sales practices at the AOL unit. Last month the company said it had uncovered irregular accounting that boosted advertising and e-commerce revenues by $190m. Dick Parsons, chief executive, said last month that the internal inquiry would continue.

The review, being conducted by Wayne Pace, chief financial officer, has included AOL's larger advertising and commerce transactions and other deals "in which there was a significant degree of accounting judgment exercised", the company said.

AOL is also expecting to take another goodwill charge this year, but the filing did not specify how large.

Earlier this year AOL took a $54bn non-cash charge to reflect goodwill "impairments". Analysts expect the new charge to also be in the billions of dollars.

The company said last month the write-off would not impact its debt covenants. It may also take a non-cash charge to reflect the decline in investments such as AOL Latin America, Hughes Electronics and Time Warner Telecom.

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