AOLAOL Accounting Scandal Accounting Scandal

Jason WiebeJason Wiebeandand

Jacen LougheedJacen Lougheed

What happenedWhat happenedIn 2005, Time Warner, AOL’s “Parent In 2005, Time Warner, AOL’s “Parent Company”, Reached a settlement with the Company”, Reached a settlement with the SEC (Securities and Exchange Commission) SEC (Securities and Exchange Commission) for $510 million for their falsifying of for $510 million for their falsifying of financial statements from 2000 to 2002. financial statements from 2000 to 2002. Over this time, AOL had overstated their Over this time, AOL had overstated their advertising revenue by over $500 million.advertising revenue by over $500 million.

DetailsDetailsFrom the last quarter of 2000 to 2002, From the last quarter of 2000 to 2002, AOL had been paying sites that bought AOL had been paying sites that bought advertising space, creating “Round-trip” advertising space, creating “Round-trip” transactions, essentially paying transactions, essentially paying themselves for advertising space. In themselves for advertising space. In particular, one company, PurchasePro, particular, one company, PurchasePro, had the largest hand (Outside of AOL had the largest hand (Outside of AOL itself) in this. Ernst and Young was the itself) in this. Ernst and Young was the accounting firm to perform the external accounting firm to perform the external audit.audit.

ResultsResults Due to the investigation carried out by Due to the investigation carried out by

the SEC, Time Warner, AOL, and many the SEC, Time Warner, AOL, and many of the executives involved have been of the executives involved have been individually charged for their individually charged for their involvement in the scandal.involvement in the scandal.

AOL and Time Warner’s reputations AOL and Time Warner’s reputations dropped drastically, with AOL never dropped drastically, with AOL never entirely recovering.entirely recovering.

Major PlayersMajor PlayersNameName TitleTitle PunishmentPunishment

Kent D. Wakeford

AOL Executive Director of Business Affairs

Up to 20 years Jail Up to 20 years Jail time, Fine of up to time, Fine of up to $250,000$250,000

John T. Puli AOL Vice-President of NetBusiness

Up to 20 years Jail Up to 20 years Jail time, Fine of up to time, Fine of up to $250,000$250,000

Charles E. Johnson Jr.

PurchasePro Chief Executive

Up to 20 years Jail Up to 20 years Jail time, Fine of up to time, Fine of up to $250,000$250,000

Christopher J. Benyo

PurchasePro Senior Vice President of Marketing

Up to 20 years Jail Up to 20 years Jail time, Fine of up to time, Fine of up to $250,000$250,000

Joseph Michael Kennedy

PurchasePro Vice-President and Chief Technology Officer

Up to 20 years Jail Up to 20 years Jail time, Fine of up to time, Fine of up to $250,000$250,000

Scott E. Wiegand

PurchasePro Senior Vice-President and General Counsel

Up to 20 years Jail Up to 20 years Jail time, Fine of up to time, Fine of up to $250,000$250,000

Works CitedWorks Cited

http://wapo.st/La0g5O http://wapo.st/La0g5O (Washington Post)(Washington Post)

http://wapo.st/Ls9fOn http://wapo.st/Ls9fOn (Washington Post)(Washington Post)

http://bit.ly/K9FfZz http://bit.ly/K9FfZz (TechNewsWorld.com)(TechNewsWorld.com)

http://bit.ly/LqVvYk http://bit.ly/LqVvYk (GlobalEthics.org)(GlobalEthics.org)