Feeds

CA faces SEC action

The Ghost of Accountancy Past

  • alert
  • submit to reddit

Security for virtualized datacentres

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. ®

Security and trust: The backbone of doing business over the internet

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
Bono: Apple will sort out monetising music where the labels failed
Remastered so hard it would be difficult or impossible to master it again
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
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?
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.