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AOL may be $400m worse off than it thought

Regulators still not happy with media giant's accounts
Written by CNET Networks, Contributor

Regulators still not happy with media giant's accounts

Regulators reviewing AOL Time Warner's accounting said they may require the company to restate as much as $400m in advertising revenue booked in relation to a deal involving the company's America Online division and Bertelesmann. AOL disclosed the accounting issue in a securities filing on Friday. In dispute are two advertising deals for $125m and $275m booked during the first quarter of 2001 through the fourth quarter of 2002. They represent the largest advertising transactions by America Online during that period, the company stated in the filing. AOL said the SEC has told the company that the agency's "preliminary view" is that the revenue should not have been recorded as advertising revenue but as a reduction in costs of AOL's $800m repurchase of its stake in AOL Europe from Bertelesmann. AOL has so far restated $190m in revenue following an internal audit. The audit is ongoing, AOL said in its filing, although the company has not discovered any other items it believes require restatement. AOL has told the SEC that it believes the disputed revenues were accounted for appropriately. An AOL representative said the company is "continuing [its] efforts to cooperate with SEC as we have been all along". In a separate SEC filing, AOL revealed that Chief Executive Officer Richard Parsons, Chairman Steve Case, Vice Chairmen Kenneth Novack and Ted Turner were all paid the same $1m salary in 2002 that they had received in 2001. Evan Hansen writes for News.com
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