Norwegian police on Thursday charged Fast Search & Transfer with accounting fraud, an enterprise search company bought by Microsoft in January for US$1.2 billion.
Police also raided Fast Search & Transfer's Oslo office, seizing computers and documents, said Bard Thorsen, a prosecutor with Norway's economic and environmental crimes unit.
Authorities allege the company improperly reported revenue for which there was no basis in 2006 and 2007, prior to Microsoft's acquisition, Thorsen said. If found guilty, the company could face a fine, he said.
Norway's financial supervisory authority, the Kredittilsynet, referred the company to the police earlier this year after noticing irregularities in its books.
In 2006, Fast Search & Transfer allegedly counted a memorandum of understanding as revenue. In May 2007, the company drew further attention after mistakenly releasing a copy of a presentation related to first-quarter 2007 results. Two months later, Norway's financial authority sent a letter to the company asking for information about its bookkeeping.
As a result of the inquiry, Fast Search & Transfer restated its earnings in May, flipping a 15 million Norwegian krone (US$3 million) profit into a 200 million Norwegian krone loss.
Microsoft could not be immediately reached for comment. However, Microsoft has said it has taken steps to align Fast Search & Transfer's accounting practices with its own.