Feeds

CA's 'material weakness' leads to more accounting woes

Six-year bookkeeping journey

Choosing a cloud hosting partner with confidence

CA this week extended its poor accounting streak, announcing that it will delay reporting fourth quarter and full year financial results. The delay stems from the software maker's failure to record sales commission expenses correctly.

Instead of reporting earnings per share of 2 cents in the fourth quarter as it once forecasted, CA now expects to post a 7 cents per share loss. Much of this swing comes from an extra $70m in sales commissions that, erm, weren't properly recorded. This accounting snafu builds on an ugly bookkeeping history at CA and a spate of recent executive departures.

"This increase in sales commission expense resulted from a new sales commission plan that did not appropriately align commission payments with the Company’s overall performance," CA explained in a statement.

CA will restate its third quarter earnings to reflect $26m in additional commission expense charges that should have been recorded in the past. In addition, it has delayed the release of fourth quarter and full-year figures and cancelled a June 8 conference with financial analysts. (Wouldn't that meeting have been fun?)

Beyond all that, CA has admitted to having some serious accounting woes.

"The Company also will report a material weakness in its financial controls relating to the forecasting, processing, and monitoring of sales commissions," CA said. "As stated above, the Company has not concluded its review of this matter and further adjustments may be necessary."

Last month, CA's former CEO Sanjay Kumar joined a number of former executives in pleading guilty to taking part in an accounting scandal that saw the company make use of the so-called "35 day month." This accounting method allowed CA to book extra revenue during certain sales periods.

When Kumar handed in his guilty plea, CA's new management proclaimed, "We are a dramatically different organisation than we were two years ago" with an "infrastructure that promotes integrity, compliance and good governance."

CA's current CEO John Swainson had a different message this week.

“Clearly we are disappointed that what would have been a solid year was impacted by execution issues relating to commissions, which adversely affected our fourth quarter performance and led to a restatement of our third quarter results," Swainson said. "We are making changes to ensure that these problems do not recur, and are confident going forward that our value proposition of helping customers manage and secure their enterprise IT environments is sound."

In recent months, CA has lost its CFO, COO and CTO. ®

Internet Security Threat Report 2014

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
HBO shocks US pay TV world: We're down with OTT. Netflix says, 'Gee'
This affects every broadcaster, every cable guy
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
SCREW YOU, EU: BBC rolls out Right To Remember as Google deletes links
Not even Google can withstand the power of Auntie
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
America's super-secret X-37B plane returns to Earth after nearly TWO YEARS aloft
674 days in space for US Air Force's mystery orbital vehicle
10 Top Tips For PRs Considering Whether To Phone The Register
You'll Read These And LOL Even Though They're Serious
prev story

Whitepapers

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.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
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?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.