Google exec settles with SEC for SmartForce work

WASHINGTON, July 19 (Reuters) - A Google Inc. (GOOG.O) executive has settled accounting charges with securities regulators for his work as chief financial officer at another company, SmartForce Plc, the U.S. Securities and Exchange Commission said on Thursday.

The former CFO, David Drummond, is now senior vice president for corporate development at Google. He settled the SEC charges without admitting or denying the allegations.

Drummond was one of four former executives at the software company, SmartForce, who agreed to pay $2.3 million to settle accounting violation charges related to overstating profit by $127 million, the agency said.

"In retrospect, Mr. Drummond acknowledges that he would have been better served in his role at SmartForce had he possessed an accounting background," Drummond's attorney Harvey Wolkoff said in a statement.

"However, it was not unusual during this period in time to find many CFOs like David who were not trained as accountants, but instead were hired for their expertise in other important corporate functions."

Drummond was employed at SmartForce from June 1999 until January 2002.

The SEC said it also settled with the company's former outside auditor, Ernst & Young Chartered Accountants, which agreed to pay $725,000, and with the lead partner of the SmartForce engagement, Denis O'Hogan, for improper professional conduct.

SmartForce, which was based in Redwood, California, has since merged into SkillSoft Plc SKIL.O.

The SEC said SmartForce's financial statements improperly recognized revenue from various types of transactions, including multiple-element arrangements, reciprocal transactions, and reseller agreements.

The accounting violations resulted in an overstatement of the company's revenue by $113.6 million and net income by $127 million during a period of time from 1999 to 2002, the SEC said.

Former SmartForce vice presidents of finance, Patrick Murphy and John Hayes, and former controller of SmartForce US, Patrick Chew, also settled without admitting or denying the SEC charges.

O'Hogan and Ernst & Young Chartered Accountants also settled without admitting or denying the allegations.

Attorneys for Murphy, Hayes, Chew, O'Hogan and Ernst & Young did not immediately return calls for comment.