Accounting Scandal, Which?

"Financial downturns often expose accounting problems at companies, but scandals have been noticeably absent in the recent turmoil. Not so anymore. Late Friday, Huron Consulting Group Inc. said it would restate the last three years of financial results, withdraw its 2009 earnings guidance and lower its outlook for 2009 revenue. The accounting snafu, which has decimated the company's shares, was all the more surprising, because Huron traces its roots to Arthur Andersen LLP, the accounting firm as the heart of the last wave of scandals. A dose of added irony is that Huron makes its money providing financial and legal consulting services, including forensic-style investigative work, and tries to help clients avoid these types of mistakes. ... After its founding by 25 Andersen partners and more than 200 employees, Huron grew rapidly. ... Growing scrutiny of accounting firms that also did consulting made Huron's consulting-only business look promising, and shares soared from below $20 five years ago to nearly $44 before the news Friday. ... Huron is restating financial statements to correct how it accounted for certain acquisition-related payments to employees of four businesses Huron purchased since 2005", Gregory Zuckerman at the WSJ, 5 August 2009, link: http://online.wsj.com/article/SB124943146672806361.html.

I read Huron's recent 8-Ks about this "problem" and Huron's last 10-K. I am not convinced Huron's previously issued financials were wrong and that the restatement is right. If so, Huron and PWC were defrauded and people should go to prison. Alternatively, Huron is using the restatements to effect what was known as "big bath" accounting decades ago. Stay tuned for further developments.