Consulting Group in May 2004. Lipski's duties at Huron include external financial reporting, GAAP accounting, revenue recognition, internal financial statements, acquisition accounting, internal controls, and oversee internal and external audits. Effect of Errors and Changes on Financial Statements Under GAAP and other rules governed by the Securities and Exchange Commission (SEC), "actions of economic interest holders in the company can be imputed to the company itself" (Huron Press Release, 2009).In short, the actions of he employees receiving the "earn-out" payments and redistributing them to another turned the redistribution into compensation paid by the company, and hence, a material change in the reporting of expenses, with a corresponding impact of a reduction of $56 million to net income and EBITDA. The newly classified payments need to be accounted for as non-cash compensation expense of the Company with "corresponding increase to additional paid-in capital.
"(Huron Press Release, 2009).This restatement however, did not affect Huron's cash flow from operations, or affect he assets, liabilities or stockholder's equity accounts. Affect on Stockholders Stockholders took a significant hit from the events relating to the restatement with earnings per share dropping an estimated average of 42% over the restatement period. The price of the company's stock also fell. Prior to the discovery, Huron's stock had reached an artificially inflated price of $83.
25 per share and fell to a low of $13. 9 per share after the restatement announcement, the unrelated SEC inquiry and the resignation of the company's CEO, CFO, and CAO. The stocks decline in value relating to these events triggered other issues and pending liabilities for the company. Persons who purchased or otherwise acquired the common stock of Huron between