Policy Management Systems Corp has now acknowledged that it recognised on its financial statements some revenue from licence agreements before the agreements were formally signed, the Wall Street Journal reported: in a written response to a shareholder lawsuit it denied that it misrepresented the company’s financial health in an effort to achieve a consistent 20% growth, as the lawsuit charges, but admits that it included revenue in the fourth quarter of 1992 from agreements that were not formally signed by the parties until first quarter 1993, adding that on occasion, its employees agreed with customers that the customer would receive future services in exchange for payments of some of their invoices and in those cases, it recognised the revenue from the invoices in quarters before the customer received the services; some employees may also have agreed with customers that amounts paid to Policy Management as licence fees, and booked as current income, would be refunded to the customer; the internal audit of its books by Coopers & Lybrand will be released in mid-February.
