Report: Federal prosecutors probe Computer Associates financial reports

NEW YORK - Federal prosecutors reportedly are looking into whether Computer Associates deliberately overstated sales and profits to inflate its stock price and enrich senior executives. <br> <br> Federal prosecutors in Brooklyn have opened a preliminary inquiry into the Islandia, N.Y.-based software company&#39;s books, The New York Times reported Wednesday, citing two people close to the investigation. <br> <br> Corporate accounting practices have come under new scrutiny following the collapse of Enron Corp. <br> <br> Since October 2000, has reported its financial results using a &#34;pro forma&#34; accounting practice that makes its profits and sales seem much larger than under standard accounting rules. <br> <br> The company also continues to report its results under regular accounting rules. But because of a change Computer Associates made in its contracts when it began using pro forma accounting, the standard results are essentially meaningless for investors, the Times said. <br> <br> Former employees have said that Computer Associates began using pro forma accounting because it had run out of ways to inflate its results under standard accounting rules and had to find a new method, the Times said. <br> <br> The company has denied those accusations and says that its accounting was and continues to be proper. <br> <br> In a statement early Wednesday, Computer Associates said, &#34;We have not been contacted by the authorities regarding any investigation and do not know what, if anything, is being investigated. The reporting of our financial results has always been in accordance with all applicable accounting principles.&#34; <br> <br> <br>