Computer Associates fires nine amid accounting probe

Computer Associates fires nine amid accounting probe

Computer Associates International Inc. (CA) fired nine employees in its legal and finance departments on Monday in connection with its internal investigation of accounting violations that have already led to criminal charges against several former executives.

A company spokesman declined to release the names or positions of the fired employees. Eight worked in CA's Islandia, New York, headquarters, while another was based in Atlanta, the company said. CA said it will use staff from other areas and its international subsidiaries to temporarily handle the additional work in the affected departments.

CA, one of the IT industry's largest software vendors, admitted in October to improperly booking revenue from contracts before they were finalized to inflate its quarterly earnings in its 2000 fiscal year. The U.S. Securities and Exchange Commission (SEC), which is pursuing sanctions against involved employees and warned CA it may take punitive action against the company, estimates CA improperly recognized US$1.4 billion in revenue throughout the year.

CA fired its then-chief financial officer, Ira Zar, in October 2003, when it released preliminary findings from an ongoing investigation by its board's audit committee. Zar and three former colleagues have pleaded guilty to federal charges including securities fraud.

More than a dozen CA employees have now been forced out as a result of the accounting scandal, including the company's general counsel, Steven Woghin. CA initially said Woghin would change positions but remain with the company, a decision it reversed two weeks ago with the announcement that Woghin's employment had been terminated.

CA's spokesman declined to comment on whether the latest round of firings means the company has purged from its ranks all employees connected with the accounting violations. Questions remain about the company's chief executive, Sanjay Kumar, who served as president and chief operating officer when the accounting improprieties occurred. Kumar appears to be a target of investigators from the SEC and U.S. Department of Justice, which say their inquiries into CA's past are still in progress.

CA's board is close to completing its own assessment of the accounting problems and whether the company needs to restate its financial reports from 2000. CA changed its accounting methods in November 2000 -- eight months after the end of its 2000 fiscal year -- to recognize revenue gradually over the life of a contract, a change that effectively ruled out the kind of bookkeeping manipulation in which the company previously engaged.

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