The company submitted its sworn statements to the Securities and Exchange Commission on schedule, but also said it is reviewing the propriety of several advertising transactions that amount to approximately $49 million. The amount is immaterial compared with AOL Time Warner's total revenues. It is not yet clear that a restatement will be necessary. However, the company indicated in an SEC filing that this is one possible outcome. In the meantime, AOL has declined to name the other companies involved.

In an SEC filing, the company said it learned in the past 10 days that revenue from three advertising deals had been recorded inappropriately. The head of the unit that structured the deals left the company last Friday.

Industry experts say AOL management was caught "between a rock and a hard place" regarding its SEC certification requirement. Both the SEC and the Justice Department are already investigating AOL's accounting practices, following reports in the Washington Post that AOL sold ads for eBay Inc., the giant online auctioneer, and booked the revenues as its own revenue.

An AOL source said none of the three deals flagged as potential errors were identified in the Post's series. The company still maintains it confirmed with its auditor, Ernst & Young, that all the deals examined by the Post were booked according to generally accepted accounting principles (GAAP). However, during the company's quarterly conference call in July, CEO Richard D. Parsons acknowledged that sticking to GAAP "may not be enough" in today's climate and that he wants his company to be "on the leading edge" of disclosures.

Notwithstanding the decision to sign the SEC certification statements, Moody's Investors Service lost no time in cutting AOL Time Warner's credit-rating outlook to negative. Standard & Poor's had already given the company a negative credit outlook last month.

-Rosemary Schlank