Reid D. Notes
Long/short equity, value

CGI Group: Cookie Jar Accounting And The Logica Acquisition (Part 1)

Please read our disclosure at the end of this entry. All figures in CAD unless noted otherwise.

This is the first in a series of entries on CGI Group, Inc. (NYSE:GIB) in which we will explore CGI's financial disclosures, prospects for growth, and valuation. We are short CGI's stock.

In this entry, we introduce CGI's Logica acquisition and explain a set of accounting techniques that the SEC has referred to as "cookie jar" accounting.

We also suggest investors read a recent article about CGI's accounting written by Bethany McLean and published by Vanity Fair. In the article, McLean compares CGI's accounting with techniques that were used at Tyco International Ltd. before Tyco was investigated by the SEC. McLean...

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