1. GROUP K3 RAJA MOHAMMAD AZEEHAN BIN RAJA AZMAN (221680) FATIN SYAZWIN BT SUID (221844) NURSYAKIRAH BT OTHMAN (222189) MOHAMAD HANAFI BIN MAT HUSSIN (223981) NURUL ZULAIKHA BINTI MOHD NOOR (224129)

2. 1) Misconduct in financial reporting  Stephen Richards’s manipulated Computer Associate’s (CA) quarter end cut off to align CA’s financial reported results with the market expectations  He also did not pay attention to their financial responsibilities  CA’s executives including Richards prolonged the fiscal quarter, worked with and allowed subordinates to negotiate and obtain contracts after the quarter ended

3.  CA would improperly recognize the revenue from those contracts  failed to alert CA’s Finance or Sales Acct. Depart. that CA salespersons that reported to Richards were obtaining contracts with backdated signatures dates after quarter end  CA recognized future quarter revenue in the current financial statements, which makes those statements look more profitable thereby attracting more investors

4. 2) Misleading federal regulators  CA did not follow GAAP  CA lied to its investors and shareholders about its true sales within the quarters in question  the company was recognizing the revenue when a customer signed a contract for future years of software licenses  CA was recognizing the entire value of the contract for the software as revenue in the period in which the contract was signed

5. 1) Improperly record the revenue  CA’s accounting strategy was to recognize next quarter revenue in the current quarter, which increased the revenue in the current quarter  Revenue from software sales were recognized once a contract was signed, the software was delivered and payment was reasonably assured  this revenue recognition is conservative, the life of the software seems too long for this method

6.  since the sales become official once the contract is signed, it doesn’t matter if the life of the software license is long or short

7. 2) Lack of Safeguarding financial reporting  CA chose to backdate contracts  CA recognize revenue improperly without informing their auditors of these decisions or situations that were occurring  the safeguarding of financial reporting falls back on the CA's company  Failure in the operation of effectively designed controls over a significant account or process  Although the physical inventory count does not safeguard the inventory from theft or loss, it prevents a material misstatement of the financial statements if performed effectively and timely

8. 3) Lack of internal control  Internal controls have the ability to make or break the goals a company may have while at the same time keeping the compliance of their staff efficient  The ineffective control environment within those sectors enabled the “overlooking of conduct involving conflicts of interest” between employees and vendors  It also can overriding attempts to frustrate and discourage the reporting and investigation of improper conduct  From this cade, several employees and managers were fired or resigned, and new executives have been appointed as the head of the region, procurement chief and general counsel