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Audit: Millions in Costs Misreported by Verizon

January 24, 2002|From Bloomberg News

SAN FRANCISCO — Verizon Communications Inc.'s California unit misreported more than $100 million in costs, made excess profit and should return some money to customers, a consumer advocacy group said Wednesday.

The biggest U.S. local-phone company failed to comply with California reporting regulations between 1996 and 1998, the Office of Ratepayer Advocates said. The California Public Utilities Commission should impose tighter rules and force New York-based Verizon to return allegedly excess profit to its customers, the group said.

"We're asking the commission to take strong steps to resuscitate its regulatory oversight and set the stage to protect the financial interests of consumers," the group's director, Regina Birdsell, said in a statement. "The commission should make sure these dollars get back to Verizon's customers."

The advocates office is an independent arm of the state PUC.

Verizon misallocated costs, exhibited weak internal controls and failed to comply with the CPUC's rules regarding affiliate transactions, said Dan Sanchez, who oversaw the audit.

Verizon agreed with findings regarding the reporting of about $50 million, and it has agreed to change some "internal procedures," spokeswoman Julia Wilson said.

Verizon shares rose 85 cents Wednesday, to $49.15 on the New York Stock Exchange. The Office of Ratepayer Advocates released its statement after trading closed.

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