Three senior executives at Computer Associates International Inc., including its chief financial officer, have been asked to leave the company in an ongoing investigation over past accounting practices, CA announced Wednesday.
Sanjay Kumar, CA’s chairman and chief executive officer, requested the resignations in response to preliminary results from an internal investigation of the accounting issues. The results determined that CA booked revenue from some sales prematurely during its fiscal year ending March 31, 2000, CA said in a statement.
CA has received resignations from Ira Zar, chief financial officer; Lloyd Silverstein, senior vice-president, finance; and David Rivard, vice-president, finance. The three men oversaw the company’s sales accounting during the period in question, CA said.
An external search for a new CFO will begin immediately, the Islandia, N.Y.-based company said. Douglas Robinson, CA senior vice-president, finance, will fill the position in the interim.
CA has been facing two U.S. federal probes into its revenue recognition practices. The company also established an audit committee to investigate the matter internally, led by Walter P. Schuetze, a former chief accountant at the U.S. Securities and Exchange Commission.
The committee’s probe continues, but initial results revealed a number of software contracts in fiscal 2000 that “appear to have been signed after the end of the quarter in which revenues associated with such contracts had been recognized. Those revenues should have been recognized in the quarter in which the contract was signed,” Schuetze said in the statement.
The value of the contracts wasn’t disclosed in the statement. CA said it informed government investigators of its findings. Its audit committee will examine whether the company needs to restate past financial results.
The investigations concern accounting practices that were in place before CA adopted its current system for revenue recognition in October 2000, the company noted. The new system recognizes revenue monthly over the life of a contract and replaced its up-front recognition system.
CA also reaffirmed its previously stated financial targets for the quarter ended Sept. 30, 2003. CA is due to report its results for the period on Oct. 22.