IN APRIL 1999, the top executives at Peregrine Systems Inc. met with the company’s board of directors. On the table that day was a critical decision for the San Diego-based software business. Peregrine Chief Financial Officer David Farley asked the directors to decide whether to adopt aggressive accounting methods that would allow the company to make its numbers, or use a more conservative approach and miss its quarterly goals.
The board resolved to make Wall Street happy and pump up the revenue. But, oddly enough, there was no mention of this key decision in the minutes of that meeting. Why didn’t the company’s general counsel and corporate secretary, Richard Nelson, record the board’s decision Nelson, who was Farley’s protg, later said he couldn’t explain the omission.
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