Cookie Jar Reserves: How Computer Associates Backdated a 35-Day Month to Hit Every Number
The contracts were real. The customers were real. Only the dates were fiction. Computer Associates' fraud didn't require inventing sales — it required holding each quarter open past period-end, then backdating license agreements signed in the following weeks to pull their revenue backward across the line.
Under the software revenue recognition rules of the era, the moment a contract was 'signed' determined the quarter in which its revenue landed. Computer Associates exploited that single timing variable, systematically extending its fiscal months — the so-called 35-day month — to manufacture a streak of consensus-beating quarters that masked the true timing of demand.
This episode establishes how the manipulation worked at the level of contract execution dates, how it survived audit, and how it ultimately produced a $2.2 billion restatement, an SEC enforcement action, and the criminal convictions of CEO Sanjay Kumar and EVP Stephen Richards.
Drawn from SEC v. Computer Associates, U.S. v. Kumar, the DOJ deferred prosecution agreement, and the 2004 restatement filings.
Money Power Fraud — follow the documents, not the narrative.