McAfee has reached a proposed settlement with federal regulators that it hopes will end a three-year investigation into its accounting practices. The security software vendor announced Thursday that it has set aside US$50 million (NZ$72 million) to pay an anticipated penalty.
The US Securities and Exchange Commission (SEC) began informally investigating McAfee, then called Network Associates, after the company changed the way it booked software revenue in December 2000. A formal SEC investigation was announced in March 2002.
Previously, McAfee had recognised software revenue when it shipped software to distributors, but after the 2000 changes, it began counting sales only when software had actually been sold by the distributor, says Kent Roberts, executive vice president and general counsel with McAfee.
The SEC has been examining whether McAfee properly accounted for this transition, Roberts says.
The proposed settlement calls for additional measures beyond the $50 million penalty, but Roberts declined to elaborate on what they might be. The penalty will be recognised as an expense in McAfee's third-quarter results, which will be announced later this month, Roberts says.
No timeline has been set for the SEC Commissioners to vote on the settlement agreement, but the Commission's staff is recommending that the proposal be accepted, Roberts says. "They will receive the submission and they will make whatever decision they make on that," he says.