U. s. Securities and Exchange Commission and Fraud Financial Statements Essay

Submitted By Cortney6
Words: 611
Pages: 3

Computer Associates fraud In summary, a software corporation called Computer Associates International kept its books open recording revenue after the quarter ended to meet quarterly earnings estimate. An analyst’s estimate for firms’ quarterly or annual earnings is vital for a company’s future, which is why the company wanted to make sure they put their best foot forward. Firstly, Computer associates was wrong because when the quarter came to a close they kept it open and kept recording revenue. They knew they didn’t meet estimates during the quarter and needed a way to make that up to get good reviews. Secondly, Computer associates employees were at fault as well. CEO Sanjay Kumar, oversaw all of the illegal actions and is the one who executed the entire prolonged quarterly practice. He signed false and misleading contracts that were filed directly with the SEC. Stephen Richards participated in the unlawful acts but even worse he involved another department in the company, the sales accounting department. He did not alert them that salespeople were getting contracts with backdated signature after quarter ending. Steven Woghin signed amendments filed with the SEC knowing wholeheartedly that the information was false as well as bringing in the company’s legal department to approve the deceiving contracts. Although providing fraudulent financial statement is wrong morally and accounting wise, accounting firms still do it. Essentially a company wants its books to look as “clean” as possible. Having clean and well-kept financial statements that are reliable, relevant, and consistent will appeal to future shareholders, as well as potential investors which could bring more money into the company. Providing fraud financial statements could result in increased revenues from others, positive Wall Street quarterly earnings estimates, for example it was predicted that Computer Associates would gross 59 cents and the company actually stated they earned 60 cents; this would definitely appeal to individuals investing in the company. Fraud financial statements could also make the CEO of the company look great, having a healthy and flourishing company is a great self-image booster. On the other hand, the consequences of reporting fraud financial statements include but are not limited to your company name being blemished, no one trusts