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Computer Associates may face civil action

Software company Computer Associates International Inc. Monday said it may face civil charges for improper accounting of revenue in fiscal 2000.
/ Source: Reuters

Software company Computer Associates International Inc., which has been under investigation by federal regulators over its accounting practices, on Monday said it may face civil charges for improper accounting of revenue in fiscal 2000.

The Islandia, New York based software company said that it had received a "Wells Notice" from the Securities and Exchange Commission, which indicated its staff is considering recommending a civil enforcement proceeding for possible violations of securities laws.

Computer Associates, whose shares fell 1.9 percent in early trading, said the possible charges relate to its previous disclosure that it had prematurely recognized revenue on software contracts during the fiscal year ended March 31, 2000.

Computer Associates said that it had prematurely booked revenue on contracts before they were fully executed or finalized.

Computer Associates said the investigations launched by the SEC and the U.S. Attorney's office in 2002 focus on accounting practices that were in place until the company changed its business model in October 2000.

In October, Computer Associates said that three finance executives, including its chief financial officer, had been ousted due to the probe into early revenue recognition.

Chief Executive Sanjay Kumar said at that time that a number of software contracts from the 2000 fiscal year appeared to have been signed after the end of the quarter in which they were booked.

Computer Associates shares were down 54 cents at $27.60 on the New York Stock Exchange in morning trade.