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Computer Associates Fraud Assignment

Accounting fraud assignment - presentation

Jack Yang

on 4 December 2012

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Transcript of Computer Associates Fraud Assignment

Jack Yang Computer Associates Who are Computer Associates? The Outcome Conclusion The 5th largest independent software corporation in the world. Sanjay Kumar A CA employee since 1987.

Former COO. Took the position of CEO in 2000.

Made the company more customer friendly.

CA reported $6 billion in sales the year Kumar
became CEO. The price per stock was $71. 2006: Kumar and two other CA executives were accused of securities fraud and obstruction of justice. Accounting for money in a business should be done without distorting the numbers. Accounting Scandals Founded by Charles B. Wang in 1976. CEOs: Charles Wang 1976 - 2000
Sanjay Kumar 2000 - 2004 Distributes IT (information technology) to other businesses. Founder Charles B. Wang A controversial history of acquisitions Sanjay Kumar
CEO 2000 - 2004 Accounting Scandal Analysts got suspicious, so an investigation was launched.

Kumar lied to investigators, wiped his hard drive clean when investigators asked that he preserve his computer data, and paid $3.7 million to a potential witness

Kumar resigned as CEO in 2004, but retained close ties with CA. The "35-day month" and "Cleaning Up" 35-day month - journals are kept open for a week after a fiscal month has ended. Cleaning up - timestamps on business contracts and deals are erased and then altered to an earlier date. Computer Associates was able to recognize earnings prematurely in order to meet or exceed the stock market's quarterly expectations. “Like a team that played 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.”

- Mark K. Schonfeld, Director of the SEC's Northeast Regional Office Kumar plead guilty to the case and was sentenced to 12 years in jail; he was ordered to pay $800 million in restitution.

CA was ordered to pay $225 million to stockholders. The company has since changed its name from Computer Associates to CA Technologies. Every company should have a code of ethics to prevent unethical business practices from taking place and to avoid potential lawsuits.
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