SEC expands CA accounting probe

The US Securities and Exchange Commission (SEC) is now formally investigating Computer Associates International (CA) and has issued subpoenas to outside parties for relevant documents, CA disclosed Wednesday in a regulatory filing.

News of the SEC probe, being conducted jointly with the US Attorney's Office, first spread in February when CA confirmed press reports of the inquiry. The investigation "appears generally to be focusing on issues relating to the company's historical revenue recognition policies and practices," CA said Wednesday.

CA revamped its business model in late 2000, shifting its sales focus to selling software on a subscription basis and altering its accounting to recognise revenue from sales throughout the life of contracts, rather than all at once when they are signed. While CA maintains the accounting change was made to increase the clarity of its financial reporting and steady its revenue, charges that the move was intended to mask slumping sales have dogged the company.

A formal SEC order of investigation gives the organisation's staff authority to issue subpoenas and take testimony, CA said, stressing that the issuance of the order does not reflect any determination of guilt.

CA's accounting is also at issue in several shareholder lawsuits seeking class-action status, filed in February and March. CA remains confident facts do not support the charges, the company said Wednesday.

The SEC filing comes one day after CA reported a US$238 million net loss for its just-ended fourth quarter, on revenue of $772 million.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about CA TechnologiesSECSecurities and Exchange Commission

Show Comments
[]