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Report: Microsoft's accounting under scrutiny

Report: Microsoft's accounting under scrutiny

Adding fuel to suspicions raised over corporate accounting methods, a report surfaced on Wednesday that the US Securities and Exchange Commission (SEC) is still actively investigating questions over whether Microsoft hoarded revenue in certain quarters so that it could be used to inflate future earnings results.

According to Wednesday's Wall Street Journal, Microsoft is being investigated for putting aside some of its revenue so that it could be applied to future quarters when earnings weren't up to expectations -- a practice which could be seen as misleading to investors.

The SEC investigation into the software maker's accounting practices has been under way for years, but is coming under particular scrutiny in light of the recent implosion of energy trading firm Enron, whose accounting practices cast a shadow of doubt on the entire subject of corporate finances.

Microsoft executives first publically announced the accounting probe during a June 30, 1999 conference call, and has made note of the investigation in every quarterly financial report since then.

Microsoft spokesman Jim Desler refused to comment on the current status of the inquiry on Wednesday, since it is a non-public investigation. He did say that the company takes its financial reporting responsibilities very seriously, and complies with every aspect of its reporting obligations.

The spokesman added that Microsoft has fully cooperated with the SEC.

No-one from the SEC was available to confirm the details of the investigation on Wednesday.


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