More Accounting Questions Raised at Computer Associates

Investigators hear stories of selective revenue recognition.
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The government's probe into bookkeeping practices at

Computer Associates

(CA) - Get Report

reportedly might have expanded after former employees told investigators stories of selective revenue recognition.

Federal investigators have received information from former employees who claimed the software giant often wrongly dated revenue to enhance results and meet earnings goals in specific quarters,

The Wall Street Journal

reported Monday.

Investigators were also told that Computer Associates sometimes bundled free software with certain contract renewals in order to book more revenue than would otherwise be appropriate, the story said. Computer Associates denied wrongdoing with regard to free software and said sales representatives don't understand how the company's revenue recognition works.

The investigation encompasses practices carried out as recently as last year, well after the company overhauled its accounting practices to adopt more conservative revenue recognition, the

Journal

reported.

The new allegations follow months of investigations by a number of regulatory bodies into CA's bookkeeping. The company's founder, Charles Wang, gave up the position of CEO last week, turning the reins over to longtime right-hand man Sanjay Kumar.