Andersen Advised Qwest, Global Crossing on Capacity Swaps: Report
📅 - Arthur Andersen LLP advised Qwest Communications, Global Crossing and other telecom clients on how to structure "swaps" of network capacity that are now the subject of government investigations, according to an Andersen document obtained by The Wall Street Journal this week.
The document, which dates back as far as December 2000, describes various methods used to account for capacity swaps and explains the auditing and accounting firm's approach to telecom accounting. Andersen, already reeling from its involvement in the Enron scandal, was reportedly well known in accounting circles for being a proponent of swap accounting, according to the Journal.
Under swapping agreements, telecoms would exchange network capacity and account the sale as revenue and the purchase as a capital expense.
Although it is difficult to determine exactly what advice telecoms may have extracted from the so-called "white paper," the Journal said the document is accompanied by a disclaimer that warns it does not constitute expert legal advice.
The U.S. Securities and Exchange Commission (SEC) is currently investigating Qwest, Global Crossing and others for possibly using swaps to inflate revenues. The Federal Bureau of Investigation (FBI) is also looking in to the accounting practices of the telecom industry.
The document, which dates back as far as December 2000, describes various methods used to account for capacity swaps and explains the auditing and accounting firm's approach to telecom accounting. Andersen, already reeling from its involvement in the Enron scandal, was reportedly well known in accounting circles for being a proponent of swap accounting, according to the Journal.
Under swapping agreements, telecoms would exchange network capacity and account the sale as revenue and the purchase as a capital expense.
Although it is difficult to determine exactly what advice telecoms may have extracted from the so-called "white paper," the Journal said the document is accompanied by a disclaimer that warns it does not constitute expert legal advice.
The U.S. Securities and Exchange Commission (SEC) is currently investigating Qwest, Global Crossing and others for possibly using swaps to inflate revenues. The Federal Bureau of Investigation (FBI) is also looking in to the accounting practices of the telecom industry.
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