levin70

Huron Consulting's Spectacular Blow Up

Its a Staff Accounting Bulletin 5T Issue, in which the Company should have recorded an expense for principal shareholders paying expenses on behalf of the Company. In this case, using some of the stock received and giving it to its employees to boost their comp based on results. So the stock issued as contigent earnouts was recorded as a purchase price adjustment (balance sheet) instead of as compensation expense. Somehow the CEO and CFO knew, were consulted, etc and they did nothing or they actively participated is what I am guessing, but not really sure.

In regards to PWC - they aren't clairvoyant. To expect them to find out about private transactions between the selling stockholders and certain employees is beyond the scope of any typical FS audit.

Regards