Accepting Responsibility

By John Pallatto  |  Posted 2004-04-22 Print this article Print

There is a thin line between moral responsibility and legal culpability. No top corporate executive should assume the posture of Enron former chairman Ken Lay that he had no direct knowledge of massive and systematic financial fraud committed by subordinates. To accept the position of corporate chairman is to accept direct responsibility for the accuracy and honesty of all financial statements.

That is why the U.S. Congress felt compelled to adopt the Sarbanes-Oxley Act for public company accounting reform and investment protection. The act has set deadlines for corporate chief executives to legally vouch for the contents of official financial statements.

Kumar is apparently lucky that the final Sarbanes-Oxley compliance deadlines havent passed, or he might become one of the first corporate chairmen prosecuted under its provisions.

But he may also feel like the luckiest man in the world because he has been allowed to throw off the heavy burden of running CA to return to his roots as a technologist. It may prove to be the best thing that ever happened to CA, if it means that the company will be able to refresh its product line with technology that will keep it on a growth path.

To achieve this goal, CA cannot afford to miss this opportunity to fix, once and for all, the deceptive accounting practices that have cast a pall over its prospects. Instituting permanent financial reforms will allow the company to focus on selling enterprise software, rather than dealing with the fallout of financial malfeasance investigations.

Read why Enterprise Applications Center Editor John Pallatto believes CA needs an outsider at the helm. The election of independent director Lewis Ranieri as chairman is a good first step. But the selection of the next CEO will be more critical in solving the companys problems. CA co-founder Russell Artzt, executive vice president, has been mentioned as a possible CEO candidate along with the companys new chief financial officer, Jeff Clarke.

Clarke was recruited in April from Hewlett-Packard Co. and, as such, he may bring in an outsiders point of view that CA needs to resolve its problems. But it may still prove best to bring in another outsider to lead the company while supervising Clarkes efforts to permanently fix CA accounting practices.

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John Pallatto John Pallatto is's Managing Editor News/West Coast. He directs eWEEK's news coverage in Silicon Valley and throughout the West Coast region. He has more than 35 years of experience as a professional journalist, which began as a report with the Hartford Courant daily newspaper in Connecticut. He was also a member of the founding staff of PC Week in March 1984. Pallatto was PC Week's West Coast bureau chief, a senior editor at Ziff Davis' Internet Computing magazine and the West Coast bureau chief at Internet World magazine.

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