Qwest Says Used Improper Accounting
DENVER (Reuters) - Qwest Communications International Inc., which is the subject of an accounting investigation by the U.S. Securities and Exchange Commission, said on Sunday it used improper accounting methods in 1999 through 2001 and will restate its financial results.
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Qwest, the dominant local telephone company in 14 states from Minnesota to Washington, also withdrew its financial forecasts for 2002, citing ongoing weakness in the telecommunications sector, stiff competition and softness in regional economy. It said all areas of its business have been hurt.
The Denver-based company, which also faces a criminal probe by the U.S. Justice Department, said it improperly accounted for about $1.16 billion in sales of optical capacity on its network, as well as sales of communications equipment. The company said it is reviewing the accounting practices and may be required to restate all optical capacity sales.
The expected restatement of the company's financial statements will also include adjustments for three transactions relating to the sale of communications equipment.
Qwest said its new auditor, KPMG, will not be able to finalize its review of the second quarter financial report. Qwest is one of several telecommunications companies, including bankrupt carriers Global Crossing Ltd. and WorldCom Inc., to come under scrutiny by federal regulators.
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