Computer Associates, whose books and policies are still under government investigation, has tossed three of its top financial people out on their ear after the company's Audit Committee found certain revenues were prematurely recognized in CA's fiscal year ended March 31, 2000. CA CEO Sanjay Kumar said Wednesday evening that when the audit turned up the irregularities he asked for and got the resignations of CFO Ira Zar, senior finance VP Lloyd Silverstein and finance VP David Rivard since they oversaw sales accounting when the bookings were made. There wouldn't have been an internal audit without the lengthy joint probe by the US Attorney's Office and the SEC that's been going on and that's been focused on when exactly the company recognized revenue prior to October 2000. CA changed its accounting method in October of 2000, the same month chairman and founder Charles Wang stepped down as CEO, to booking revenue as a subscription from one in which the entire contract value was booked at signing. According to outside director and former SEC chief accountant Walter Schuetze, who chaired the Audit Committee, "The committee found that a number of software contracts in that fiscal year appear to have been signed after the end of the quarter in which revenues associated with such contracts had been recognized. Those revenues should have been recognized in the quarter in which the contract was signed." Schuetze said the contracts in question were valid, that the products were delivered and that payment was received. It seems that CA is trying to mitigate its criminal exposure and ultimate penalties by investigating itself, reporting the results to the regulators and remedying the situation by blaming the three men and having them take the fall. Bear Stearns said the company "might be able to spin this positively, suggesting legal issues are not as bad as some feared and might soon be behind CA." The company is going to be looking on the outside for a new CFO. Meantime, senior VP of finance, Douglas Robinson will fill in. The company said it was unclear whether it would have to restate FY 2000. That's the next question the Audit Committee has to answer. CA reiterated its second-quarter earnings guidance saying it'll do $805 million-$825 million in revenues. Actual results are due October 22. Analysts are expecting earnings of 14 cents a share, up from four cents a year ago. When last seen CA's stock was being punished, down over 10%.

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