Microsoft Agrees to Refrain from Accounting Violations

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Last updated at: (Beijing Time) Tuesday, June 04, 2002

Microsoft Agrees to Refrain from Accounting Violations

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The U.S. software giant, Microsoft Corp., has agreed to refrain from accounting violations to settle federal regulators' allegations that it misrepresented its financial performance, the U.S. Securities and Exchange Commission (SEC) announced Monday.

Under a settlement with the SEC, Microsoft Corp. neither admitted to nor denied wrongdoing. No fine was imposed by the government.

The SEC alleged that Microsoft's accounting practices from July1994 through June 1998 caused its income to be substantially misstated. It said Microsoft enhanced its financial results by setting aside artificially large reserves to reduce revenues, withthe idea of reversing that procedure to record the revenues in less profitable times. But the SEC did not allege fraud in the Microsoft case.

Microsoft said in a statement from its headquarters in Redmond,Washington, that it has cooperated fully in the SEC's investigation which began in 1998.

The company is pleased to have resolved these matters with the SEC and looks forward to an open and constructive working relationship with the SEC on important accounting issues affectingthe software industry, the statement said.

The settlement comes as the U.S. Securities and Exchange Commission is investigating and acting against alleged accounting abuses at a number of big companies in the aftermath of Enron's collapse.

In April, Xerox Corp. agreed to pay a civil penalty of a record10 million dollars and revise its financial statements back to 1997 to settle the SEC's allegations of accounting fraud. The SEC said the office-equipment maker used "accounting tricks" and "accounting opportunities" to boost its earnings by some 1.5 billion dollars and hide its true performance from investors.

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