AOL Time Warner Acknowledges Problems With AOL Accounting

NEW YORK – AOL Time Warner acknowledged Wednesday that it may have improperly booked revenues from three transactions at its America Online unit, whose accounting practices are being scrutinized by federal regulators.

The announcement marked a departure from AOL Time Warner's previous assertions that its accounting was sound, and followed word earlier in the day that an executive who negotiated many deals for America Online that are being investigated by the government has left the company.

AOL Time Warner said in a statement that the transactions totaled approximately $49 million and occurred from the last quarter of 2000 through the first quarter of this year. The company said it was still examining those and other transactions at AOL and has not made a final determination whether the accounting was proper.

AOL Time Warner's finances were called into question last month when The Washington Post in a series of articles outlined unusual techniques the AOL division used for accounting revenue, including booking ads sold on behalf of eBay as revenue for itself.

On Wednesday, the company did not describe the three possibly questionable transactions, but said its announcement was based on information that came to light in recent days.

"I am committed to completing our internal review and resolving those questions," Richard Parsons, the chief executive of AOL Time Warner, said in a statement.

The amounts involved would be an insignificant portion of the company's overall revenue. However, AOL Time Warner, like other major firms, has been under heightened scrutiny due to the recent wave of accounting scandals that have taken down Enron, Adelphia Communications and WorldCom.

Earlier Wednesday, the company said David Colburn, an executive who negotiated many advertising deals for America Online, had left the company last week. Those are among the deals being investigated by the Securities and Exchange Commission and the Justice Department.

Company spokesman Jim Whitney declined to discuss the reasons for Colburn's departure, but a source familiar with the matter said Colburn had been forced out and that the company had locked him out of his office.

Colburn, who lives in Potomac, Md., could not be reached for comment because he has an unlisted phone number.

Colburn's departure came just days before Wednesday's deadline for corporate executives to vouch for their accounting statements. Parsons said the company had signed the statements.

AOL Time Warner is the world's largest media conglomerate with holdings spanning Time magazine, CNN, Warner Bros. and HBO.