The Daily Caveat has been woefully remiss in failing to mention the continuing issues at Computer Associates. It has been a rollercoaster ride for the IT consulting giant over the last few years, weathering accounting errors and executive scandals dating back to 2000 that continuing to dog the firm and its reputation.

Just last year CA announced a 2.2 billion restatement and it late May the company disclosed that it will again restate revenues - this time for the last five years (2000-2005) based on the need to review 10 questionable transactions. Of the latest restatement, Rich Duprey of MotleyFool.com had this to say:

The improper contracts are a disturbing discovery because the company has had two months since the end of the quarter to locate such issues but only found them now. Moreover, the discoveries continue to keep in focus the accounting scandals that rocked this company and put four executives on courtroom dockets last year. Computer Associates says it found that it had entered into a swap deal with third parties that had no valid commercial purpose, serving merely to allow it to book revenues early. The new management team says it was former managers who were responsible for the deals, and it has referred the findings to the government.

Full article at Motley Fool.

In a recent SEC filing, CA provides some further information on exactly what went down with these questionable transactions, while sunnily maintaining that the worst is behind them.

Via Accountancy Age:

CA digs deeper into financial scandal

Tom Sanders in California
Jun 02, 2005

Computer Associates has been forced to further restate its revenues for 2000 to 2005, opening the latest chapter in its financial accounting scandal. The company admitted in a newly published filing with the Securities and Exchange Commission (SEC) that a further review of its accounts for the period reveals that it wrongly booked deals as revenue that should have been booked as barters. 'These transactions appear not to have been negotiated on an arm's-length basis and to have no valid commercial purpose,' the filing stated.

CA also identified some deals that required it to reach certain targets. Those revenues should not have been booked until those target dates, CA said. The company expects to reduce recorded sales from 2000 to 2004 by $95m (£52m) to $125m. The restatement will add $7m-$10m to 2005's revenues.

Senior managers who were responsible have since left the company, the filing said. CA fired chief executive Sanjay Kumar in June 2004. He has since been charged with securities fraud and obstruction of justice. The vendor hired former IBM executive John Swainson as his replacement. Kumar was closely associated with CA founder Charles Wang, who retired in 2002 amid increasing calls for a management overhaul within the company.

The SEC said last September that CA had prematurely booked more than $3.3bn in revenue from 1998 to 2000.

Michael Dortch, principal analyst with the Robert Frances Group, told Accountancy Age sister website vnunet.com that, although the latest restatement adds yet another chapter to CA's ongoing bookkeeping scandal, it will not have much of an impact on how users view the company.

'If the transactions had been more recent, it would have been more damaging. Given that they relate to 2000 and 2001, most customers will look at this as the final stages of house cleaning,' he said. The filing coincided with the publication of financial results for the quarter ending 31 March. CA reported $910m in revenues, up seven per cent over last year, but profit fell 81 per cent to $17m.

The original Accountancy Age article can be found here.

-- MDT

Labels: CA