Backdating a computer animal dating site

Posted by / 16-Nov-2019 09:22

Backdating a computer

At Computer Associates and many other companies, big portions of executives’ compensation depend on meeting specific goals.

Inflated figures meant Computer Associates executives were paid more than they should have been – extra compensation that came from shareholders’ pockets.

“People, for whatever reason, are fixating on certain numbers in the financial statement.

If it’s not in the quarter, it’s not as good,” Richardson says.

The most extreme incident was the second quarter of 2000, when the company reported 7 million in revenues beyond the

At Computer Associates and many other companies, big portions of executives’ compensation depend on meeting specific goals.Inflated figures meant Computer Associates executives were paid more than they should have been – extra compensation that came from shareholders’ pockets.“People, for whatever reason, are fixating on certain numbers in the financial statement.

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At Computer Associates and many other companies, big portions of executives’ compensation depend on meeting specific goals.

Inflated figures meant Computer Associates executives were paid more than they should have been – extra compensation that came from shareholders’ pockets.

“People, for whatever reason, are fixating on certain numbers in the financial statement.

If it’s not in the quarter, it’s not as good,” Richardson says.

The most extreme incident was the second quarter of 2000, when the company reported $557 million in revenues beyond the $1.047 billion it could properly claim.

.047 billion it could properly claim.

These “order backlogs” can be detailed in quarterly reports so long as they are not in the quarter’s revenue and earnings calculations.

Richardson does not believe the Computer Associates case and others like it point to the need for regulatory reform.

The accounting flexibility available to public companies is necessary, he notes, even though it makes some breaches hard to detect.

It is indeed a serious offense, says Scott Richardson, professor of accounting at Wharton. At the same time, a federal grand jury brought criminal charges against former Computer Associates chairman and CEO Sanjay Kumar and the firm’s former head of worldwide sales, Stephen Richards.

“While it appears innocuous to say it is revenue one day early, this type of practice allows companies to draw on future earnings to deliver earnings and revenue growth, to help justify high [price-to-earnings] multiples,” he notes, adding: “Clearly, while this appears innocuous, the consequences are far from that.” Late in September, the company agreed to pay 5 million in restitution to shareholders to settle a civil case brought by the Securities and Exchange Commission and to defer criminal charges by the U. Both men were forced to resign in April, about two years after the scandal broke. A number of other executives were implicated as well. Schonfeld, director of the SEC’s Northeast Regional Office, boiled the case down to its essence: “Like a team that plays on after the final whistle has blown, Computer Associates kept scoring until it had all the points it needed to make every quarter look like a win.” The SEC said the scheme began in 1998, possibly earlier, and continued through September 2000.

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