The online retailer made note of the SEC's inquiry in its third quarter earnings report, issued Tuesday.

"Amazon.com has received informal inquiries from the SEC staff with respect to accounting treatment and disclosures for some of its initial Amazon Commerce Network transactions and has responded to those questions," the company said in the report.

The Seattle-based outfit, which sells books and music, among other things, said it reviewed the accounting for the transactions with its auditors and the SEC staff, and that it believes that the accounting treatment and disclosures were appropriate.

The firm also said it will continue to cooperate with the SEC staff.

In a conference call Tuesday, Amazon chief financial officer Warren Jenson told analysts, "We remain confident that our accounting and disclosures have been correct and have been appropriately conservative."

The commerce network represents a series of promotional partnerships the firm has forged with other retailers, including ToysRUs.com, Microsoft and Ofoto. According to Jenson, about one-third of ACN's $30 million in revenue was cash-based, but going forward, the firm expects the bulk of the revenue from those deals to be cash.

"As we look ahead, based on those arrangements today, the bulk of our revenue ... will be cash based, where we will see over 70 percent of that revenue will be cash," he said.

Meanwhile, Amazon surprised Wall Street by reporting a smaller loss than expected. The firm posted pro forma net losses of $89.4 million, or 25 cents per share for the quarter. Analysts reportedly had expected the company to post a pro forma loss of 33 cents per share, the Associated Press said.

-- SmartPros News Staff

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