As it heads into bankruptcy, MF Global's debt management is getting scrutinized in published reports as potentially misleading to investors, but no one so far is calling the accounting illegal.

Jon Corzine, the beleaguered chairman and CEO of MF Global, resigned after the brokerage collapsed over risky bets on European's sovereign debt. Now media analysis of MF Global's debt over the past several quarters raises questions about whether the entity window dressed its balance sheet to make it appear less leveraged at financial report closing dates.

Chuck Mulford, director of the Financial Reporting & Analysis Lab at the Georgia Institute of Technology, says it appears for at least the past seven quarters, the amount of borrowing at each quarter close date was well below the average for each quarter and “extremely well below” the peak for each quarter. But that's not to say the accounting was in violation of Generally Accepted Accounting Principles, he says. “It's a matter of putting on more debt during the quarter, then taking it off at the end of the quarter,” he says. “But they accounted for borrowings as borrowings.”

The debt-management allegations carry a familiar ring to those who followed the bankruptcy proceedings of Lehman Brothers and the subsequent tweak to accounting rules to close the loophole Lehman so infamously leveraged. Lehman's bankruptcy examiner said the firm routinely used short-term repurchase agreements to shuffle billions in debt off the balance sheet at key period close dates and described them in financial statements as true asset sales. The Financial Accounting Standards Board amended accounting standards to eliminate the bright lines Lehman leveraged to arrive at its accounting policy.

Mulford says it doesn't appear that MF Global misrepresented its repurchase agreements, so it's different in that respect from Lehman's gamesmanship and not likely to lead to allegations of accounting fraud. But considering MF Global's current plight following its losing bets, “it's the least of their problems,” he says.