Probe Into CA Books Reportedly Widening - InformationWeek

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Probe Into CA Books Reportedly Widening

Computer Associates dismisses accusations that it misdated sales contracts.

It seems Charles Wang stepped down as chairman of Computer Associates at just the right time. The government reportedly is widening its probe into CA's accounting practices and looking into the company's revenue bookings as recently as last year. At the same time, some former employees are accusing CA of misdating contracts.

Wang stepped down last week from the company he co-founded.

"The story in The Wall Street Journal is largely based on the allegations and speculation of a few former employees, who have brought their complaints to the government," a company spokesman says. "They are free to do all the guessing they want, but, as we said last week, Computer Associates has not been advised by either the SEC or the U.S. Attorney's Office of any recent change in the status of the inquiry into the company's accounting practices."

Former employees of the software maker say the company improperly dated contracts to shift revenue between quarters, The Wall Street Journal reported Monday, citing former employees and lawyers with knowledge of the matter.

CA has maintained that the federal Securities and Exchange Commission's yearlong probe was interested only in its historical practices, mainly surrounding a $1.1 billion stock grant to three top executives, including Wang and his successor, Sanjay Kumar, in 1998.

CA suggested in a statement replying to the Journal's report that its former employees made the revelations "in an attempt to embarrass the company and press their individual lawsuits" against Computer Associates. The company says its outside auditors had already cleared the transactions cited by the Journal. The transactions, CA says, were booked properly, according to company policies.

The company implied that the former employees had been confused by dates on sales-proposal documents and contract-signing dates.

One transaction cited in the Journal was a contract with Allstate Insurance Co. that wasn't booked until the quarter after the deal was signed. A former employee says she believed the delay was meant to boost earnings.

In trading on the New York Stock Exchange, shares of Computer Associates rose 16 cents to close Monday at $14.98.

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