Hewlett-Packard’s allegations of revenue-recognition problems at Autonomy, the U.K. software company it acquired last year, has some market participants uneasy about the approach of a new standard on revenue recognition. The coming global standard is being produced jointly by the U.S. Financial Accounting Board and the International Accounting Standards Board, and it will be principles-based, in line with international standards, rather than offering the detailed regulations common to U.S. GAAP accounting. Critics fear the less detailed approach may allow for more accounting shenanigans.
HP cited “serious accounting improprieties” at Autonomy, alleging that the software company had mixed sales of hardware with sales of software and improperly booked revenue to middlemen. Autonomy said its accounting complied with international standards.