SEC ups Adelphia inquiry to formal probe
Adelphia Communications' woes continue. Yesterday, the MSO delayed its 10-K filing; today, the Securities and Exchange Commission is launching a formal investigation into some of the company's accounting practices.
Yesterday, Adelphia announced that along with its auditor Deloitte & Touche LLP, it is reviewing the accounting treatment for matters related to its co-borrowing agreements. The review would delay the filing of its 10-K form with the SEC, Adelphia said. The company intends to file its 10-K "as soon as practicable after that review has been completed."
Following the announcement, the SEC stepped up its informal inquiry to a formal investigation. On April 3, Adelphia announced the SEC had launched an informal inquiry to look into some of Adelphia's previously disclosed co-borrowing agreements. At the time, Adelphia said it was cooperating fully.
The cabler has been under fire for $2.3 billion in off-balance-sheet items that came to light during a March 27 fourth-quarter earnings call. Adelphia also is continuing to investigate its accounting treatment for $500 million in loans related to its former CLEC Adelphia Business Solutions Inc., which filed bankruptcy in late March. Adelphia said it does not believe the review "will result in any other material changes to historical amounts that were reported" in its fourth-quarter press release.
In the wake of the fall of Enron, the SEC has been keeping a close eye on several telecoms, including Global Crossing, WorldCom, Qwest Communications International Inc. and Williams Communications. These companies are among those that have had some aspect of their accounting practices brought into question by the SEC.