Company executives set aside revenues from financial reports to conceal the volatility of the company's business, attorneys argued in a case settled last year.
The allegations are part of a probe by the Securities and Exchange Commission announced by Microsoft last week. The agency in recent months has vowed to crack down on the practice, which is known as keeping "cookie jar reserves" because companies can dip into them to conceal slow business during lean quarters. A violation can result in a fines or an order requiring a company to restate its earnings.
"Corporate audit started reporting on and finding some matters that embarrassed perhaps Mike Brown or others in the company because they were fairly serious problems," Pancerzewski, a partner at accounting giant Deloitte & Touch before coming to work at Microsoft, testified in deposition taken in the case.