Two large credit ratings agencies issued cautionary statements and CA CEO Sanjay Kumar announced that he had asked for the resignation of three finance executives after the firm’s audit committee found revenue had been recognized incorrectly in the fiscal year ending March 2000.
The company had reported revenue in quarters before sales contracts had been signed, rather than during the quarters they were signed. All of the deals in question did actually close, so the revenue was not fictitious
CA has also been under investigation by the US Attorney’s Office in New York, and the Securities and Exchange Commission since February 2002. The subject of the probes has not been disclosed, but they are believed to stretch back as far as CA’s fiscal 1998.
In 2002, reports said the company wrongly booked over $500 million in revenue during its fiscal 1998 and 1999, which inflated its share price. Senior employees, including Kumar and former chairman Charles Wang, enjoyed over $1 billion in stock bonuses as a result.
This article was based on material originally published by ComputerWire.
