Computer Associates
Computer Associates Ethics Paper
Brief Summary:
Based in Islandia, N.Y., Computer Associates dominated the market for mainstream utility software, programs that helped the computers used by big companies run more efficiently. The company also offers security & storage software. Computer Associates used variety of tricks to inflate its reported profits during the 1990’s. In October 2000, the company changed the way it sold software and the way it reported its sales.
The Securities and Exchange Commission announced securities fraud charges against Computer Associates International, Inc. and three of the company 's former top executives -- Sanjay Kumar, former CEO and Chairman, Stephen Richards, former Head of Sales, and Steven Woghin, former General Counsel. The SEC alleges that from 1998 to 2000, Computer Associates routinely kept its books open to record revenue from contracts executed after the quarter ended in order to meet Wall Street quarterly earnings estimates. In total, Computer Associates prematurely recognized $2.2 billion in revenue in FY2000 and FY2001 and more than $1.1 billion in premature revenue in prior quarters. In addition, Computer Associates, through former executives Kumar, Richards and Woghin and others, obstructed the SEC 's investigation into the company 's accounting practices.
The SEC 's complaints, filed in the United States District Court for the Eastern District of New York, allege as follows:
• With no regard for generally accepted accounting principles (GAAP) or their financial reporting obligations, the defendants manipulated Computer Associates ' quarter end cutoff to align Computer Associates ' reported financial results with market expectations.
• During the period from at least Jan. 1, 1998, through Sept. 30, 2000, Computer Associates prematurely recognized over $3.3 billion in revenue from at least 363 software contracts that Computer Associates, its customer, or both parties, had not yet executed, in violation
Brief Summary:
Based in Islandia, N.Y., Computer Associates dominated the market for mainstream utility software, programs that helped the computers used by big companies run more efficiently. The company also offers security & storage software. Computer Associates used variety of tricks to inflate its reported profits during the 1990’s. In October 2000, the company changed the way it sold software and the way it reported its sales.
The Securities and Exchange Commission announced securities fraud charges against Computer Associates International, Inc. and three of the company 's former top executives -- Sanjay Kumar, former CEO and Chairman, Stephen Richards, former Head of Sales, and Steven Woghin, former General Counsel. The SEC alleges that from 1998 to 2000, Computer Associates routinely kept its books open to record revenue from contracts executed after the quarter ended in order to meet Wall Street quarterly earnings estimates. In total, Computer Associates prematurely recognized $2.2 billion in revenue in FY2000 and FY2001 and more than $1.1 billion in premature revenue in prior quarters. In addition, Computer Associates, through former executives Kumar, Richards and Woghin and others, obstructed the SEC 's investigation into the company 's accounting practices.
The SEC 's complaints, filed in the United States District Court for the Eastern District of New York, allege as follows:
• With no regard for generally accepted accounting principles (GAAP) or their financial reporting obligations, the defendants manipulated Computer Associates ' quarter end cutoff to align Computer Associates ' reported financial results with market expectations.
• During the period from at least Jan. 1, 1998, through Sept. 30, 2000, Computer Associates prematurely recognized over $3.3 billion in revenue from at least 363 software contracts that Computer Associates, its customer, or both parties, had not yet executed, in violation
References: Berenson, Alex. The New York Times 8 April, 2004 Forelle, Charles. Wall Street Journal 21 Feb., 2002 Kessler, Robert. McClatchy, Tribune Business News [Washington] 14 April 2007 www.sec.gov