The accounting scandal threatening to erupt at Computer Associates took another twist as reports emerged that federal investators may have widened their probe to examine revenue bookings from as recently as last year.
The investigation by the Department of Justice and the Securities and Exchange Commission had been focusing on a $1.1 billion executive compensation package and the company’s method of booking revenue in 1998. But former employees, who are suing Computer Associates on various grounds, have been questioned by investigators about accounting practices in years as recent as 2000.
According to their lawyer, Joseph Ranni, the former employees allege that the company used customer contracts and free software to shift revenue between quarters in 1999 and 2000. One client alleges that a contract that was signed in December 1999 was not booked until the following quarter. Another client alleges that a contract renewal with AOL Time Warner was booked in the quarter ended March 31, 2000, when it was actually approved in the following quarter.
A CA spokesman said the reports of the wider probe were based on “allegations and speculation of a few former employees”. He said: “ As we said last week, Computer Associates has not been advised by either the SEC or the U.S. Attorney's Office of any recent change in the status of the inquiry into the company's accounting practices.”
CA believes that the claims are “an attempt to embarrass the company and press their individual lawsuits". It insists that its outside auditors cleared the transactions which were booked properly, according to company policies.