"Revenue recognition" is the most common type of corporate book-cooking. The Autonomy scandal, though still murky, allegedly involves a great deal of overstated revenue, or how much money was coming into the company from customers.

That allegation has been leveled by HP, which said last month it overpaid for Autonomy and accused it of "serious accounting improprieties." Autonomy has rejected such allegations and said HP is looking for "scapegoats."

The dispute comes as accounting standard setters grapple with new standards for recognizing revenue. Some accountants fear these standards, set for completion by mid-2013, could mean a step backward in fighting accounting abuses.

The goal of the new, global approach is ambitious. If completed as planned, the standards would for the first time put companies in the United States and in more than 100 other countries under the same revenue accounting rules. Inconsistency on this is widespread now and often a source of disagreements.

But critics said the new standards would discard decades of detailed U.S. accounting rules in favor of broader, principles-based international norms. That, they said, would be a mistake.

"The U.S. system was replete with details, replete with examples, and replete with precedent," said Tom Selling, author of the Accounting Onion blog.

Throwing away that level of detail would give corporate managers more room to manipulate revenues and profits, he said.

FASB-IASB EFFORT

One of the most far-reaching accounting changes in decades, the new revenue standard is a combined effort of the U.S. Financial Accounting Standards Board (FASB) and the London-based International Accounting Standards Board (IASB).

FASB manages the U.S. play book for accountants, known as the Generally Accepted Accounting Principles, or GAAP. IASB sets International Financial Reporting Standards, or IFRS, which is used in more than 100 countries, but not the United States.

For a decade now, the global accounting profession has been working on merging IFRS and GAAP, but it has been a tortuous process, with U.S. accountants often resisting change.

Some leading accounting groups are losing patience. The London-based Institute of Chartered Accountants in England and Wales (ICAEW) on Tuesday called for an end to the "convergence" project.

The new revenue standards, if implemented as planned, would supplant hundreds of pages of GAAP-style guidance, rules and examples with broader directives.

One concern is that big companies and auditors would be left to interpret the new standards on their own, creating "shadow guidance" with little input from investors, said Sandra Peters, head of financial reporting at the CFA Institute.

"Generally, the policies are very generic," said Peters, whose group represents more than 100,000 financial professionals worldwide. "The issue is, as investors, how will you know what the guidance is if it's not in the standard?"

FASB board member Russell Golden said the board is working out a mechanism to help interpret the standard. There will be enough guidance so it can be applied consistently, he said.

AUDITS A CONCERN

Joseph Carcello, accounting professor at the University of Tennessee, said it could be tougher for auditors to push back against aggressive accounting if there is no clear rule to cite as having been violated.

Finally, legal experts said it could be harder to prosecute wrongdoers under a principles-based system. Showing a GAAP violation is often a starting point for a securities lawsuit.

"Principles-based standards will indeed make liability more difficult to impose and in turn pose greater challenges to plaintiffs, including the Securities and Exchange Commission," said James Cox, a law professor at Duke University.

U.S. revenue accounting was tightened after scandals at software companies during the 1990s technology bubble. Software accounting is often subject to abuse because booking revenue involves a mix of products, maintenance, training and updates.

Autonomy was accused of mixing hardware with higher-margin sales of search software and not properly disclosing the amounts of hardware sales. It was also accused of improperly booking revenue to resellers, or middlemen, with no end users.

Autonomy has defended its accounting and said it complied with IFRS standards, which left room for interpretation.

The heads of FASB and IASB said last week they doubted major changes will be needed to the proposed revenue standards in light of the scandal at Autonomy.

Supporters said the new standards would simplify a hodgepodge of industry-specific U.S. rules with a general maxim saying that revenue should be booked when goods or services are transferred to customers.

The detailed U.S. GAAP rules have drawbacks. Companies intent on hiding their true condition have found ways to comply with the letter of the rules, while still misleading investors, said Bruce Pounder, director of professional programs at SmartPros, a firm that provides education for accountants.

Standard-setters have not set an effective date for the new standards, but they are not expected to take effect before 2016.

(Additional reporting by Sarah Lynch in Washington and Nanette Byrnes in Chapel Hill, N.C.; Editing by Kevin Drawbaugh and Tim Dobbyn)

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