Computer Associates International, Inc. (CA) announced that the employment of nine employees in its Legal and Finance departments was terminated today as a result of issues raised during the independent investigation by the CA Board of Director’s Audit Committee into the Company’s accounting practices.
The employment terminations included four individuals in the Legal Department and five individuals in the Finance Department, and were effective immediately. Eight of the employees were based in CA headquarters in Islandia, N.Y., while one employee was based in Atlanta, Ga.
The Audit Committee, headed by former SEC Chief Accountant Walter P. Schuetze, is nearing completion of its investigation and its assessment of whether a restatement of prior period financial statements is required under GAAP, and, if so, the extent of such restatement.
“As the Audit Committee wraps up its work and takes these remedial actions, the management team has continued to focus on the business at hand as we have in the past months,” said CA Chairman and CEO Sanjay Kumar. “We have kicked off our new fiscal year, rolled out our fiscal year objectives, and remain focused on keeping our customers at the center of all that we are doing.”
Kumar said the Company is drawing upon staff from other areas and from its international subsidiaries to temporarily handle work responsibilities in the affected departments. Kumar added that the Company still expects to release Q4 and 2004 fiscal year-end results May 12 as scheduled and that the Company has submitted its response to the Jan. 8, 2004 Securities and Exchange Commission Wells Notice.
As previously announced, the Audit Committee found that CA prematurely recognized revenue in fiscal 2000 on the basis of software license agreements that were signed in a later quarter. The Audit Committee continues to believe that the Company’s New Business Model and financial reporting are unaffected by the accounting practices that were in place prior to the Company’s adoption of the New Business Model in October 2000.
Although the Company is unable to predict the scope or outcome of the continuing government investigation, it is possible that it could result in the institution of administrative, civil injunctive or criminal proceedings, including charges against the Company and other officers of the Company, the imposition of fines and penalties, suspensions or debarments from government contracts, and/or other remedies and sanctions.
