The independent examiner overseeing CA's financial reporting has been given a little more time to help the troubled software vendor.
The US attorney, the SEC and the company agreed to extend the term of examiner Lee S. Richards, III, until May 1, 2007, CA said Thursday in a filing with the US Securities and Exchange Commission. The term had been set to expire this Saturday.
The extension was necessary, "given the control environment and commission-related material weaknesses" at the Islandia, New York-based company formerly known as Computer Associates Inc.
Richards was appointed independent examiner in March 2005 and was chartered with overseeing CA financial reporting under a 2004 Deferred Prosecution Agreement between the company and the Federal Court for the Eastern District of New York. CA will escape prosecution if it agrees to pay US$225 million to a restitution fund to compensate victims of its fraud and takes various steps to strengthen its corporate governance and cooperate with government investigators.
Richards is a partner with Richards Kibbe & Orbe, a law firm based in New York.
CA is trying to recover from a financial scandal that rocked the company and the extension was also granted as CA continues to reorganize its finance department under a new chief financial officer.
Sanjay Kumar, the former CEO of CA, and Stephen Richards, the company's former worldwide sales head, both pleaded guilty to financial fraud charges in federal District Court April 26. They were accused of fraudulent accounting practices, including falsely reporting hundreds of millions of dollars in revenue for licensing agreements during fiscal quarters in which the deals had not yet been finalized. Other CA executives previously convicted of similar charges were preparing to testify against Kumar and Richards.
CA's financial weakness was detailed in its annual report filed July 31, for the fiscal year ended March 31. The filing was delayed as the company conducted a review and restatement of its stock options granting practices. The restatement increased non-cash, pre-tax stock based compensation expense by an aggregate of $342 million for fiscal years 1996 through 2006, the company reported.