Mar 12, 2002 : Qwest, WorldCom Receive SEC Inquiries
📅 - Qwest Communications International Inc. saidMonday it received an informal inquiry from the Denver regional office ofthe Securities and Exchange Commission (sec.gov) requesting voluntary production of documents. Qwest says it intends to respond fully to thisrequest, which was received in a letter Friday, March 8, 2002.
The matters identified by the SEC as the focus of the inquiry relate tothree areas of Qwest's accounting policies, practices and procedures in 2000and 2001, including revenue recognition and accounting treatment of sales ofoptical capacity assets, particularly sales to customers from whom thecompany agreed to purchase optical capacity; the sale of equipment by Qwestto customers from which Qwest bought Internet services or to which Qwestcontributed equity financing, including equipment sales to KMC and Calpoint;and Qwest Dex, particularly changes in the production schedules and lives ofsome directories. The SEC informed Qwest that this informal inquiry is notan indication that it or its staff believes any violation of law hasoccurred, nor should Qwest consider the inquiry an adverse reflection on anyentity or security.
WorldCom, Inc. also said that it received a confidentialrequest from the SEC for voluntary production of documents and information.
The request addresses the following areas:
WorldCom's 3Q00 pre-tax charge associated with wholesale accountsDisputed customer bills and sales commissionsWorldCom's accounting policies for goodwill and implementation ofFAS 142WorldCom organizational charts and personnel records for formeremployeesLoans by WorldCom to officers or directorsIntegration of WorldCom and MCI's computer systemsWorldCom's tracking and review of analysts' earnings estimatesFederal or state agency investigations of WorldCom
More telecoms are likely to come under scrutiny in the wake of the Enronscandal, industry experts say. ''It wouldn't surprise me if we see more ofthis,'' Tom Friedberg, analyst at Brean Murray told USA Today. ''I don'tthink they are going to find anything they can prosecute. But you may havepeople try to rewrite the accounting rules so they are not so loose.''
The matters identified by the SEC as the focus of the inquiry relate tothree areas of Qwest's accounting policies, practices and procedures in 2000and 2001, including revenue recognition and accounting treatment of sales ofoptical capacity assets, particularly sales to customers from whom thecompany agreed to purchase optical capacity; the sale of equipment by Qwestto customers from which Qwest bought Internet services or to which Qwestcontributed equity financing, including equipment sales to KMC and Calpoint;and Qwest Dex, particularly changes in the production schedules and lives ofsome directories. The SEC informed Qwest that this informal inquiry is notan indication that it or its staff believes any violation of law hasoccurred, nor should Qwest consider the inquiry an adverse reflection on anyentity or security.
WorldCom, Inc. also said that it received a confidentialrequest from the SEC for voluntary production of documents and information.
The request addresses the following areas:
WorldCom's 3Q00 pre-tax charge associated with wholesale accountsDisputed customer bills and sales commissionsWorldCom's accounting policies for goodwill and implementation ofFAS 142WorldCom organizational charts and personnel records for formeremployeesLoans by WorldCom to officers or directorsIntegration of WorldCom and MCI's computer systemsWorldCom's tracking and review of analysts' earnings estimatesFederal or state agency investigations of WorldCom
More telecoms are likely to come under scrutiny in the wake of the Enronscandal, industry experts say. ''It wouldn't surprise me if we see more ofthis,'' Tom Friedberg, analyst at Brean Murray told USA Today. ''I don'tthink they are going to find anything they can prosecute. But you may havepeople try to rewrite the accounting rules so they are not so loose.''
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