[ by Howard Haykin ] The SEC charged a Chicago-based consulting firm and 2 former executives with having committed accounting violations over multiple years, for the purpose of overstating the income reported by the Huron Consulting Group, a provider of financial and operational consulting services to clients in various industries. Background Info on Huron and Executives. Huron Consulting Group Inc. is a Delaware corporation that principally operates out of Chicago, and provides financial and operational consulting services to clients in diverse industries - healthcare, business, and legal.  Huron shares are listed on the Nasdaq Global Select Market system.  Gary Burge, CPA, age 58, of Wheaton, IL, joined Huron in November 2002 as CFO.  Thereafter, he added the CAO and Treasurer positions, only to resign from Huron on 12/31/09.  He's been registered as a CPA since since 2010.  Wayne Lipski, CPA, 55, of Naperville, IL, joined Huron in October 2003 as Controller, and became its CAO in May 2009, only to resign from Huron on 7/31/09.  He's been a registered CPA in Illinois since 2006. SEC Findings and Violations. The SEC found that Huron allegedly had failed to properly record redistributions of sales proceeds by the selling shareholders of 4 firms acquired by Huron.  The selling shareholders redistributed the money to employees at those firms who stayed on to work at Huron as well as other Huron employees and themselves. Huron should have recorded such redistributions as compensation expense in its financial statements, because:  (i) the redistributions were contingent on the employees’ continued employment with Huron, (ii) based on the achievement of personal performance measures, or (iii) not clearly for a purpose other than compensation.  By not booking the expenditures as an expense, Huron allegedly overstated its pre-tax income to the public. Those responsible for these acccounting decisions were former CFO Gary Burge and former Controller and Chief Accounting Officer Wayne Lipski. All told, the SEC found that the financials for 2006, 2007, 2008, and Q1 of 2009 were materially misstated as a result of these accounting failures.  In August 2009, Huron restated those particular statements, which had the effect of reducing the firm's net income by about $56 million. Interestingly, the SEC noted in its order that, in January 2008, Huron, Burge, and Lipski considered an SEC Staff Accounting Bulletin, which referenced accounting principles applicable to the redistributions, but that they subsequently did not determine the full impact of the accounting principles on the company’s financial statements. According to Merri Jo Gillette, Director of the SEC’s Chicago Regional Office, "Huron’s income overstatements obscured the fact that a substantial portion of the money it paid to acquire other consulting firms was being used to retain professional talent at the firm," and they "should have known that their flawed accounting gave investors a misleading impression of the profitability of Huron’s acquisitions." SEC Agreed Upon Sanctions. Huron agreed to settle the SEC’s charges by paying a $1 million penalty, and Burge and Lipski agreed to pay a total of nearly $300K in disgorgement and penalties to settle the charges against them. SEC Chicago Regional Office Staff Credits. Investigation by Ruta Dudenas, Rebecca Bernard, Thomas Meier, and Paul Montoya.  Litigation counsel assistance from Robert Moye. For further details, go to:  [SEC PR 12-142, 7/19/12] and [SEC Complaint].