What happened to Huron Consulting? Zerohedge reported, amongst others, that Huron's CEO and CFO had resigned due to an accounting scandal. Another article set forth some more info.
Apparently someone at Huron, it is not clear who, became aware that the accounting for one of the companies acquired by Huron a few years ago was not correct. Basically, Huron acquired a company and the selling shareholders decided to give some of the proceeds to non-selling employees.
Huron booked the acquisition as if all of the price paid to the selling shareholders was for the equity and therefore largely set up as goodwill on Huron's balance sheet. However, if some of the sales price actually went to non-shareholder employees, then GAAP requires that the portion paid to non-shareholder employees be expensed as compensation. The proper treatment increases expenses and reduces net income. Further, upon review by an outside firm, there were three other acquisitions that were not accounted for properly.
Huron has stated that its prior three years of financial statements have to be restated for a pretty material reduction in earnings. The NY Times has an interesting Q&A on the Huron situation. What is doesn't ask or answer who knew what, when? I suspect that since three very senior management members resigned, someone may have knew something previously. Finally, The Chicago Tribune has a piece on the hometown company.
It is always unfortunate when something like this happens. It is unfortunate for the employees, especially the support staffs, who are dedicated to the firm. Hopefully Huron will be able to survive this.
Cheers, Mike
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