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SEC expands accounting investigation
Compiled from Times wires The Securities and Exchange Commission is looking into accounting methods at some of the nation's largest companies, broadening the scope of its inquiry beyond the accounting issues raised by the collapse of Enron to include a laundry list of other potential accounting abuses. Wednesday, Adelphia Communications Corp. said the SEC is investigating whether the cable-television company adequately disclosed $2.3-billion in debt. That followed a report by the Wall Street Journal Wednesday that regulators were investigating financial reporting practices of energy company Williams Cos. The collapse of energy trader Enron Corp. has heightened investor and regulator scrutiny of corporate accounting. The Journal reported that the SEC has doubled the number of inquiries for accounting abuses it opened in the first two months of 2002, compared with the same period in 2001. "If you look for things, you're going to find them," said Robert Willens, an analyst at Lehman Brothers Holdings Inc. who focuses on accounting. "There's enough questionable practices out there that there's plenty for the (SEC) to look at." Adelphia said Wednesday that federal regulators have asked for clarification and documentation of the $2.3-billion in off-the-books debt that the company revealed last week. The company said that the Rigas family, which controls the company, had borrowed at least $2.3-billion from Adelphia without recording that fact on its books. The loans were granted in a way that leaves Adelphia and its investors holding the bag if the Rigases default. After disclosing the loans a week ago, the company said Monday that it would delay filing its 10K report for 2001 until it had decided how to account for the loans. Analysts are now putting the loan figure as high as $2.7-billion, including money the Rigases have borrowed since Dec. 21. Adelphia, which last month agreed to buy the americast franchise in Pinellas County from Verizon, said in a statement that it was cooperating fully with an "informal inquiry" by the SEC. Rigas family members declined to comment Wednesday. At Williams Cos., spokesman Jim Gipson said the SEC sent the Tulsa, Okla., company a letter in February asking "a couple of routine questions about financial statements filed with the SEC. "A week later we heard verbally that there were no further questions and we weren't required to change anything. As far as we are concerned, it's a closed matter, and we're not aware of any open issue." He said he could not elaborate on the SEC questions. Williams Cos. profits from energy trading that can by tricky to value. The company had to delay filing its year-end financial results until it determined how to handle liabilities it had guaranteed from its former unit, Williams Communications Group Inc., an ailing telecommunications concern. Williams had indirectly backed $1.4-billion in Williams Communications notes and a $750-million lease of a telecom network, among other things, for the former subsidiary, which has run into financial trouble amid a glut in fiber capacity. Adelphia shares fell 79 cents to $11.04 after earlier touching $9.52, the lowest since September 1997. Williams Cos. stock fell $1.09, or 4.5 percent, to close at $23.08. -- Information from the Associated Press, New York Times and Bloomberg News was used in this report.
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From the Times Business report
From the AP
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