Qwest admits incorrect accounting over three years

Qwest Communications International has admitted that it wrongly booked certain sales of optical capacity assets and other telecommunication equipment in 1999, 2000 and 2001, the company said in a statement late Sunday in the U.S.

The U.S. Securities and Exchange Commission (SEC) began an investigation in April into those matters. That investigation is continuing, Qwest said in its statement.

Qwest will now have to restate its financial results for those years, once its analysis of its accounting policies is completed together with its new accountant KPMG LLP, a process that may take some time, according to the statement.

Qwest said it had identified that it:

-- applied its accounting policies incorrectly with respect to certain optical capacity asset sale transactions in 1999, 2000 and 2001, with the disputed revenue totaling US$1.16 billion.

-- incorrectly recorded certain sales of equipment in 2000 and 2001 amounting to $283 million, and will have to adjust revenue figures accordingly.

-- in a limited number of transactions it did not properly account for certain expenses incurred for telecommunicationservices in 2000 and 2001. The company overstated costs by $15 million in 2000 and understated them by $113 million in 2001.

KPMG will be unable to sign off Qwest's second-quarter results -- due next week -- because of the ongoing uncertainty and continuing analysis of the company's figures for past years, according to the statement.

Qwest also said it is withdrawing its financial guidance for the full year 2002 due to continuing weakness in the telecommunications sector and also to competitive pressure, and will issue a revised guidance along with its second-quarter results, on Aug. 8

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