Former CA employees allege contract manouevres

Former employees of Computer Associates International (CA) have told US federal investigators that the company regularly back- or...

Former employees of Computer Associates International (CA) have told US federal investigators that the company regularly back- or forward-dated customer contracts to shift revenue between financial quarters, according to a report yesterday in The Wall Street Journal (WSJ) online.

The ex-employees also told investigators that the company bundled software with maintenance contracts to justify booking more revenue up front than accounting rules permit, the report said.

CA has been under investigation by the US Justice Department (DOJ) and the US Securities and Exchange Commission (SEC) for about a year, over revenue booked in 1998 and 1999. The latest investigation is related to more recent activity.

Asked to comment on the WSJ report, a CA spokeswoman delivered a statement that the company was unaware of any change in the status of the inquiry into its accounting practices and that it continued to co-operate fully with the investigation.

"No Computer Associates executive has been subpoenaed to appear and we have received no subpoena ordering that we produce documents to a grand jury," the statement said.

"As far as subpoenas to third parties are concerned, we are not aware of any testimony given before a grand jury and, with respect to subpoenas to customers, as we have said in the past, we willingly will produce any of the documents connected with our dealings with any individual or entity if requested by the SEC and the DOJ."

In a later statement, CA categorised its former employees' comments to the WSJ as part of "an attempt to embarrass the company and press their individual lawsuits".

Several employees cited in the article are suing CA, the company said, a fact mentioned in the article, which referred to "employment and compensation disputes" being pursued by three of the quoted ex-employees.

CA also said it had examined the contracts that formed the basis for the article's allegations and reiterated that the revenue for those contracts was properly recorded.

"The reporter's sources are confused by the difference in dates on internal preliminary sales proposal documents and the dates when contracts were signed," CA said.

"Many of these transactions referred to by the reporter were examined in the ordinary course of the audit conducted by our outside auditors and found to be in order."

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