Feeds

CA faces SEC action

The Ghost of Accountancy Past

  • alert
  • submit to reddit

Intelligent flash storage arrays

Computer Associates' past has come back to haunt it. The Securities & Exchange Commission (SEC) is to pursue a civil suit against the company over historic accountancy practices, and has issued a Wells Notice against CA, the enterprise software vendor said yesterday. The case against is unlikely to reach court: more likely CA will settle with a hefty fine and abject apologies.

The Wells Notice gives CA a last chance to persuade the SEC against taking action. But we cannot envisage how CA can conduct a successful defence, considering how its own internal investigation, completed last year, revealed that the company had booked forward bookings as current revenue. Three officials, including CFO Ira Zar were fired.

CA says the action relates to fiscal 2000. During this time the company booked the entire value of software license as if as current revenue, instead of booking revenues when they were actually received. The upshot was that revenues and profits were inflated. Critics accused the company of deploying this accounting practice to support the personal targets of top management. Charles Wang, Sanjay Kumar and others stood to gain $900 million, a new benchmark for greed even in the dotcom era, as a peRformance bonus.

Following investor pressure, the bonuses were reduced substantially while founder and chairman Charles Wang was sent out to pasture, CA stopped jumping the gun on sales revenue in 2000.

Kumar is now undisputed captain at the helm and he has pledged to run a kinder, gentler CA. He is keen to comply with every best practice in corporate governance that you could think of. And then some. He has one thing to look forward to: no class action. The company settled with investors over the accountancy wheeze in August, 2003. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
MI6 oversight report on Lee Rigby murder: US web giants offer 'safe haven for TERRORISM'
PM urged to 'prioritise issue' after Facebook hindsight find
Assange™ slumps back on Ecuador's sofa after detention appeal binned
Swedish court rules there's 'great risk' WikiLeaker will dodge prosecution
You think the CLOUD's insecure? It's BETTER than UK.GOV's DATA CENTRES
We don't even know where some of them ARE – Maude
NSA mass spying reform KILLED by US Senators
Democrats needed just TWO more votes to keep alive bill reining in some surveillance
prev story

Whitepapers

Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Designing and building an open ITOA architecture
Learn about a new IT data taxonomy defined by the four data sources of IT visibility: wire, machine, agent, and synthetic data sets.
How to determine if cloud backup is right for your servers
Two key factors, technical feasibility and TCO economics, that backup and IT operations managers should consider when assessing cloud backup.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?