Microsoft Hires Accounting Firm to Audit MSN Users

Microsoft recently hired accounting firm PricewaterhouseCoopers (PwC) to audit the number of people who use the MSN network of Internet services. Industry observers say this engagement may be the first of many, as more opportunities open up for accountants to expand their assurance services.

PwC's role was to provide independent verification of the number of unique users (300 million), who visited MSN from February 1, 2002 to May 31, 2002. Microsoft explains the verification process involved a series of inspections to test compliance with the Interactive Advertising Bureau's measurement guidelines.

Suzanne Faulkner, partner at PricewaterhouseCoopers, predicts that other companies will follow Microsoft's lead. "Now, more so than ever," she said, "it's important to communicate to the public credible key operating metrics, such as the number of unique users… It's beneficial for the industry as a whole, and we suspect others will follow suit."

The trend is not surprising in view of the mounting pressures on online service providers to defend their numbers, both financial and non-financial. The pressures are coming from investors and securities analysts, who often scrutinize the number of subscribers as a way to gauge future revenues. Just last month, a number of analysts aired their skepticism about the sustainability of AOL's 35 million subscribers, given the percentage who are on free trial memberships. Microsoft reports that MSN currently has 8.7 million subscribers.

The added attention being paid to such numbers today has led to a growing clamor for uniform definitions of key analytical measures and provided opportunities for assurances from accounting firms.

-Rosemary Schlank

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