SEC widens its AOL accounting inquiry

The Securities and Exchange Commission (SEC) has expanded its inquiry into accounting practices at AOL Time Warner.

The Securities and Exchange Commission (SEC) has expanded its inquiry into accounting practices at AOL Time Warner.

According to reports this morning in the Financial Times,the SEC is now investigating three new transactions totalling $49m that took place after the merger with Time Warner last year.

AOL admitted on Wednesday that questionable accounting practices continued well after the merger was complete.

Previously the SEC was probing a handful of deals relating to advertising transactions while AOL was an independent company. But

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AOL is also examining further transactions that may have been improperly accounted for.

People close to the investigation said the findings had been passed to the SEC, the report says, and some SEC and Department of Justice investigators were sceptical this would be the last accounting announcement from the company.

The SEC's inquiries remain focused on the AOL division.

As a result of the inquiry, the company has dismissed David Colburn, head of America Online's business affairs unit, in connection with the questionable accounting.

The focus is now expected to turn to Michael Kelly, chief financial officer of AOL Time Warner last year before being demoted to chief operating officer of the AOL division.

The revelations came at the end of a day of accounting problems exposed by the new requirement on top executives of US companies to swear to the accuracy of the financial statements.