SEC formalizes inquiry into Qwest’s accounting practices

Qwest Communications announced yesterday that the Securities and Exchange Commission has issued a formal order of investigation concerning the carrier’s accounting practices.

According to a statement issued by Qwest, the formal order “covers the same subject matters as the SEC’s informal investigation,” which was launched by the commission about a month ago. Qwest stressed that it is “cooperating fully” with the SEC and would continue to do so, but did not expect to comment further on developments related to the investigation.

In a letter received by Qwest on March 8, the SEC informed the carrier it was investigating three areas of its accounting practices for fiscal 2000 and 2001. These include: the manner in which Qwest accounted for indefeasible rights-of-use sales; equipment sales made by the carrier to companies in which Qwest later invested or from which it later purchased services; and changes in the production schedules and life cycles of some of its phone directories.

At the time Qwest said it believed that its accounting practices for all periods, not just the 2000 and 2001 fiscal years, “comply with all applicable requirements.”

—Glenn Bischoff, Senior News Writer