AOL Fined for Cooking the Books : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

AOL Fined for Cooking the Books Wired News Report

11:50 a.m. May. 15, 2000 PDT

AOL has agreed to pay a penalty totaling $3.5 million to settle charges by the Securities and Exchange Commission that it improperly accounted for certain advertising costs.

AOL claimed profits for six of eight quarters during fiscal 1995 and 1996 instead of the losses it would have reported had certain costs associated with acquiring new customers been accounted for as expenses, the SEC said. The advertising costs, which included those associated with sending computer disks to potential customers, were improperly capitalized on AOL's balance sheet and reached about $385 million by Sept. 30, 1996, when the company wrote them off in their entirety.

"This action reflects the Commission's close scrutiny of accounting practices in the technology industry to make certain that the financial disclosure of companies in this area reflects present reality, not hopes for the future," said Richard Walker, the head of the SEC's enforcement division.

Maybe. But $3.5 mil is chump change to an outfit like AOL

-- Martin Thompson (, May 15, 2000

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