A report in today’s Washington Post claimed that one of the deals incorrectly booked as revenue involved a contract with WorldCom signed 12 months ago whereby AOL bought internet capacity from UUNet, a unit of WorldCom, to expand its online network.
In return WorldCom agreed to buy advertisements on AOL in a multi-year multimillion-dollar arrangement.
Such arrangements are considered ‘hollow’ because one set of goods or services are exchanged for another, and the only purpose is to book more revenue. The SEC is currently investigating whether such an accounting practice – called a round trip – violates government regulations.
Last week AOL, in its accounting oath made to the Securities and Exchange Commission, admitted that three deals worth $49m had been incorrectly booked as revenue.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements