Oracle has been exceeding analyst expectations with its cloud products, according to its financial reports, but the company’s lawyers were in court this week defending it against allegations from a former senior finance manager who says the numbers are inflated.
Svetlana Blackburn, former Oracle Senior Finance Manager for North American SaaS/Cloud Revenue was fired in 2015, and alleges that the reason for her termination was her refusal to follow improper accounting procedures for cloud revenues.
Blackburn was instructed to add “millions of dollars in accruals to financial reports, with no concrete or foreseeable billing to support the numbers,” contrary to accounting standards, according to her complaint (PDF) to the US District Court for the Northern District of California.
When she refused, and threatened to “blow the whistle”, company executives went over her head to change the data to their liking, the complaint alleges. Blackburn says she objected again, and that supervisors, another finance manager, and the company’s assistant controller were made aware of her concerns before her employment was terminated, despite a positive performance review, weeks later. She is suing the company as a whistleblower under the Sarbanes-Oxley Act and the Dodd-Frank Act.
When the suit was filed, Oracle spokesperson Deborah Hellinger told InfoWorld that the company’s cloud accounting is “proper and correct.”
“This former employee worked at Oracle for less than a year and did not work in the accounting group. She was terminated for poor performance, and we intend to sue her for malicious prosecution,” Hellinger wrote at the time.
Oracle maintains that Blackburn did not tell her supervisor she would “blow the whistle,” and also that she did not make a report to the SEC, and therefore is not entitled to whistleblower protection. The company plans to counter-sue.
Oracle’s lawyers denied Blackburn’s allegations in court on Tuesday and wrote that Blackburn’s allegations are “false and scurrilous,” and that her employment termination was due to “legitimate, non-discriminatory, job-related reasons, including Plaintiff’s ongoing performance issues and failure to address same,” Network World reports.
CIO Dive notes that accounting for cloud computing revenues is subject to evolving practices, as for instance sales of hardware used in cloud computing could be, but sometimes are not, considered cloud revenue. In this case, however, it is accounting for accruals that is in question, and that is not subject to the same uncertainty.
In other words, it is not a simple misunderstanding about what category certain revenues belong in, or when they should go on the books, as was the case in the Securities and Exchange Commission investigation of IBM cloud revenues which concluded in 2014. Blackburn is alleging that Oracle said revenues would repeat without having the recognized basis for doing so.