Essay on Cases 9 Don Russell Experiences of a ControllerCFO

(2) Accumulated Depreciation- This account accumulates the depreciation over the course of the 12 months. As mentioned above, the appraisal value of PP&E is referred to as “PP&E, net”, which is the original value of $200,000 minus the accumulated depreciation for each month.

* Avoided depreciation expenses on their garbage trucks by both assigning unsupported and inflated salvage values and extending their useful lives,

The Enron and WorldCom scandals were arguably the incidents that permanently changed the procedures for accounting controls. In response to these incidents, the Sarbanes-Oxley Act (SOX) of 2002 was passed. Once the knowledge of these scandals was made public, a number of subsequent accounting scandals were discovered in public companies such as Tyco International, HealthSouth, and American Insurance Group. In addition, a then-employee-owned company, Post, Buckley, Schuh & Jernigan, Inc. (dba PBS&J, now known as “Atkins North America, Inc.”), was also hit by a similar accounting scandal. Henceforth, a case study of PBS&J is presented where we will examine the fraudulent transactions that

Shareholders were led to believe that CA was more profitable than it was, and consequently suffered enormous losses. They had either paid more than they should have for the stock, or held on to it when, if they had known the truth, they would have sold it. 12 This extra compensation was at the expense of shareholders. 13 Richards’ actions would be considered unethical under the utilitarianism position, as his actions harms others, and under deontological positions, as he did not follow rules. In this sense, Richards’ actions would be regarded as much more serious under a deontological position, than under a teleological-parochialism position. 14 Accounting flexibility, or financial reporting choice, may also

In addition, associated with the misapplication of accounting methods, the financial industry has been plagued with one disaster after another involving numerous scandals from top leading American companies. Consequently, the Sarbanes-Oxley Act was passed in 2002 compromising eleven sections that are generated to insure the responsibilities of the company’s managers and executives. This act identifies criminal penalties for particular unethical practices and currently has new policies that a corporation must follow in their financial reporting. The following examples describe some of biggest accounting methods as a result of the greed and the outrage of the ethical and financial misconduct by the senior management of public corporations.

(1) Performed a key word search using goodwill, amortized. I scrolled down to section 35 subsequent measurement of topic 350 Intangibles- Goodwill and other.

| In Year 1, depreciation is $5,000 plus 15% of the asset’s outlayFrom Year 2, depreciation is either * 30% of the asset’s book value; or * if the asset’s book value is less than $6,500, depreciation is the asset’s book value (i.e. asset is depreciated to zero once book value < $6,500)

Such an intense focus has been placed on quarterly earnings as an indication of a company’s success by everyone from analysts to executives that ethics have for the most part been thrown out the window, sacrificed to the all important number, i.e. earnings per share. This is the theory in Alex Berenson’s book “The Number: How the Drive for Quarterly Earnings Corrupted Wall Street and Corporate America.” This number has become part of a game to be played, a figure to be manipulated – beat the number and Wall Street all but throws a parade, miss it and a company’s stock may be abandoned. Take into account the incentives that executives have to beat the number and one can find plenty of reasons to manage earnings.

In this case, the interest would not be able to be capitalized. If activities were underway for the purpose of developing land for a particular use, the expenses

After reviewing the financial information of the Tech Tennis, USA, there was a concerned due to some unusual changes in the company’s accounts. Financial statements play a crucial part in the determination of the progress of an organization. It assists the relevant personnel to identify whether the company is making profits or making losses. Although unethical, some companies will tend to deliberately misrepresent some of their financial statement information to create a false impression of the company’s success. There are various techniques that organizations utilize to manipulate their financial statements such as overstating their revenues (Bierstaker, Brody, & Pacini, 2006). In addition, some organization will tend to inflate their sales without considering their cash flow amount that the organization has acquired which will be a red flag to investigate. Consequently, financial statements provide vital information that helps both internal and external users to understand the position of the organization. Some companies in an attempt to continue in the market, they end up manipulating their financial statements that create an illusion of the success of the organization.

-The estimated depreciation lives on certain U.S. plants, machinery and equipment changed. The economic life of these assets was increased, so the depreciation expense was lowered.

4. Currently management has two problems on their hands. The first and most pressing is the fact that they have to issue a restatement of previous years’ financial statements due to accounting errors associated with premature revenue recognition. The second problem, which may have contributed to the first problem, is the fact that the company’s revenue streams are drastically changing and they hope that they continue to evolve into lifetime revenue streams, which unfortunately defer revenue significantly. This change in revenue streams and the associated recognition of that revenue, at the appropriate time, has caused INVESTools the issue of having to make the restatement. Since both issues need to be addressed and can be at the same time, it might be in the company’s best interest to do so simultaneously. The company historically chose not to capitalize most expenses that could have been capitalized under SAB 104 since their business didn’t rely on many deferred revenue streams at the time. The company would have undoubtedly preferred to change their policy for expensing deferred-revenue contracts were it not for the SEC’s preference that such costs were treated consistently and for the additional fact that they would have to make their case to the SEC, gain their approval, and restate all previous year’s financial statements. Now that the company is facing having to restate past financial statements, they might as well approach

The WMI accounting fraud case described a financial fraud committed by senior management of WMI, with the help of Arthur Andersen the external auditors. The case depicts the effort of several years to inflate profits at WMI, employing aggressive accounting practices which enabled the WMI to conceal $1.7 billion in form of expenses (Riley and Rezaee, 12). By eliminating or deferring expenses, WMI managed to meet earnings targets and improve

Does it matter what your competitors are doing? Step back and consider management’s incentives and choices. What is the motivation to manage earnings?

 an analysis of the company’s accounting policies that are likely to affect interpretation of its financial reports (at least 3 policies)