The company said it identified three transactions totalling $49m, which took place over a period of six quarters, that it said "may have been inappropriately recognised as advertising and commerce revenues".
The sum involved is a drop in the ocean of the world's largest media company's revenues, which totalled more than $32bn last year. The markets did not react unfavourably to the news -- or a downgrade on its outlook by Moody's -- with shares up by 2.31% at $11.05 when the market closed, rising a further 21 cents in after hours trading.
However, AOL Time Warner still faces investigation by the US Securities and Exchange Commission and the Justice Department. It is also facing class action lawsuits on behalf of investors, with the latest being filed by Spector, Roseman & Kodroff in Philadelphia. The lawsuit claims that AOL violated accounting rules "in an effort to mask the decline in advertising revenues".
In a statement, Richard Parsons, chief executive officer of AOL Time Warner, said: "I consider the accuracy of AOL Time Warner's financial reporting to be one of my most important responsibilities, and I am committed to giving investors accurate and transparent information about the company."
He went on to say: "I am committed to completing our internal review and resolving those questions on a thorough and timely basis, and we are moving forward to implement additional internal controls at AOL."
Parsons has certified AOL Time Warner's reports, along with Wayne Pace, chief financial officer, in compliance with an SEC order.
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