Beleaguered telecommunications carrier Qwest Communications International Inc. said Friday that it dropped Arthur Andersen LLP as its independent auditor for 2002, and has hired KPMG LLP instead.
The move comes as the Denver carrier faces not only financial woes, but an investigation by the U.S. Securities and Exchange Commission (SEC) over its accounting practices. The decision to part ways with Arthur Andersen left little surprise given the accounting firm's own embroilment with the SEC and the U.S. Department of Justice over its relationship with collapsed energy-trading firm Enron Corp.
Qwest's run-in with the SEC stems from how the carrier recognized revenue from the sales of its optical capacity, as well as the circumstances of some of its telecommunication equipment sales.
The carrier is also besought with financial problems. Although it paid US$44 billion to acquire US West Inc. in 1999, it recently said that the economic slump and a new accounting rule have forced the company to take a write-down of US$20 billion to $30 billion dollars for value of the assets acquired. Furthermore, in April Qwest said that it wold have to restate its announced 2001 fourth-quarter earnings, revising the revenue figure downward by $48 million.