Former Arthur Andersen Partners Resign from Huron Consulting Over Accounting Missteps

Chicago-based Huron Consulting Group, formed in 2002 by former Arthur Andersen partners has lost three of its top executives due to an accounting misstep. CEO and Chairman Gary Holdren, CFO Gary Burge and Chief Accounting Officer Wayne Lipski resigned from the company Friday after Huron announced it is restating financial statements for three fiscal years.

Huron will restate its financial results for 2006, 2007, 2008 and the first quarter of 2009. Analysts said the problems stem from how Huron accounted for earn-out payments tied to four acquisitions the company made between 2005 and 2007. Earn-out payments are essentially payments an acquired company receives when it hits performance goals.

According to Huron’s statement and a filing with the SEC, the selling shareholders of the acquired businesses distributed some of their payments to Huron employees. They also redistributed portions of their earnings “in amounts that were not consistent with their ownership percentages” at the time of the acquisition, Huron says.

According to reports, the company’s shares sank more than 57% in after-hours trading.