Microsoft Cooks Books

Microsoft fills the "cookie jar" in good times and dips into it in bad to create an appearance of steady growth. FTC does not approve of this accounting method.

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Former Microsoft chief of internal audits, Charlie Pancerzewski, charged Microsoft in court for wrongful termination under the Whistle Protection Act. When Judge Carolyn Dimmick approved the case for trial, Microsoft settled out of court (reportedly for $4 million).

Pancerzewski charged he had been with Microsoft since 1991, getting stellar reviews and rising in rank. In 1995 he was promoted to job level 13 - near the top of Microsoft's employment structure. Then Pancerzewski sent an email to his boss, CFO Mike Brown explaining how certain Microsoft financial practices were not compliant with GAAP (Generally Accepted Accounting Practices) and SEC (Security and Exchange Commission) regulations. He was immediately given an "out of rotation" unsatisfactory review for "poor communications skills". Within 5 months he was given the choice of resign or be fired.

What non-compliant practices did he refer to? Basically a "cookie jar reserve" scheme where profit figures are doctored to look far more steady than they actually are. Money is stashed away in reserves during fat times, rolled back out of reserves in lean. Reported in Seattle Weekly, JAN 1999.

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