Description: With too much debt and too much inventory, Payless Shoes will be seeking bankruptcy protection. All of its almost 250 stores in Canada will be shutting down. The company missed its February rent payments on most of those stores, signalling bad news for employees and landlords. One has to wonder if online sales may have been a big factor in the shoe-seller’s decline.
Date: February 19 , 2019
1) Have you been a fan of Payless Shoes? When did you last shop there?
2) To what extent do you think online sales may have hampered Payless?
3) In this story we can read how Payless had too much inventory. Where in Wiley’s Financial Accounting: Tools for Business Decision-Making can you find two financial ratios that can help a company evaluate its inventory levels? What are those ratios?
Description: Well it was one of the most spectacular corporate failures of this century, the sudden decline of Enron. The crash of this company put thousands out of work, ruined their pensions and left stockholders holding worthless shares in a former stock market darling. As well, Enron took down one of the world’s largest accounting firms, Arthur Andersen, for its part in the scandal. This week Enron’s sad story came back into focus when its former CEO, Jeffrey Skilling, was released from custody after spending 12 years in jail and 6 months in a community facility. Jeffrey Skilling’s original sentence was for 24 years with $45 million in fines. In 2013, Skilling received a sentence reduction.
Date: February 22 , 2019
1) In the past few years, we have moved farther and farther away from the time of the Enron Scandal. At one time a professor who wanted to start a discussion on ethics could easily fall back on the Enron story. But is that still the case? If you are currently at university, does the name Enron mean anything to you? If so, what did you know about the story?
2) How would discussing the Enron story help students in learning more about professional ethics?
3) On page 76 in Wiley’s Financial Accounting: Tools for Business Decision-Making you can read about an important accounting assumption called “going concern.” Why is this assumption so important to the preparation of financial statements?
Description: Now it looks like all of Facebook’s privacy issues may be going to cost the company big fines. Regulators at the Federal Trade Commission – otherwise known as the FTC – are in discussions with Facebook over what may turn out to be the largest fine the agency has ever imposed. Last March the Cambridge Analytica scandal erupted, focusing unwanted attention of Facebook’s handling of data privacy. And since that time, additional problems have emerged
Date: February 14 , 2019
1) In the last few months have you changed any of your social media habits in response to stories of data breaches?
2) How would Facebook account for a large fine imposed by the FTC? How would it show up in the financial statements?
3) On page 242 in Wiley’s Financial Accounting: Tools for Business Decision-Making you can read a more positive news story about Facebook, of how the social media site was used to benefit a Canadian manufacturer. Consider having a class discussion on the pluses and minuses of Facebook .
Description: A few months ago, Canadian regulators issued a decision Canadian consumers were tantalized by: cheaper cellphone rates. But the industry watchers appear to be underwhelmed by the results. One of the experts called the new plans being offered “pretty much a joke.” Canadians remain behind other nations in terms of the amount of data usage on their phones, perhaps because of higher rates.
Date: February 16 , 2019
1) How much data do you use every month? What are you paying?
2) Why do you think Canadians pay more for their cellular services than consumers in other nations?
3) Page 452 in Wiley’s Financial Accounting: Tools for Business Decision-Making has a table of data on the accounts receivable for two major Canadian telecommunications companies. Using the data in the problem, which company do you think is doing the best job managing its collections?
Description: Amazon has pulled the plug on setting up a second HQ in Long Island, New York. Opposition had been rising to the approximately $3 billion in tax breaks Amazon was due to receive from putting offices in the Empire State. The argument seems to break down on two sides: one claiming Amazon is bringing big benefits of jobs, taxes and salaries; the other claiming Amazon is not that great an employer and is being treated to big tax breaks.
Date: February 15 , 2019
1) What do you see as the most interesting part of this Amazon story?
2) The article says this e-Commerce giant has a tax rate of negative one per cent. How do you think this came about?
3) Page 806 in Wiley’s Financial Accounting: Tools for Business Decision-Making gives us historical information on Amazon’s price-earnings ratio. See if you can find Amazon’s price-earnings ratio for he most recent fiscal year.
Description: Nova Scotia MLAs on the Public Accounts Committee were looking for answers this week in terms of what had gone wrong at the IWK Health Centre. Several months ago the former CEO and CFO of the region’s largest children’s hospital were charged for their handling of expense account issues. In further questioning, MLAs zeroed in on purchasing practices. They also expressed concerns about the government’s imposition of new limits on the Committee’s line of questioning and its meeting frequency.
Date: February 06 , 2019; updated February 07, 2019
1) In taking a look at this article, what do you see as the biggest control weakness at the IWK Health Centre?
2) When you think about how the IWK is a high-profile fund raiser in the community, staging well-publicized efforts to raise money from the public, what would you do if you were the new CFO at IWK to establish trust?
3) What component of an internal control system do you see as the most important for the IWK right now? See page 360 in Wiley’s Financial Accounting: Tools for Business Decision-Making.
Description: This past week, Parliament was dominated by just what Justin Trudeau may – or may not – have done to intervene in the so-called Lavalin affair. If we look at SNC-Lavalin’s recent history, however, we quickly realize the engineering firm is no stranger to controversy. The stakes are high in the charges it faces regarding the corruption scandal in Libya. If found guilty, SNC-Lavalin will be barred from federal government contracts for 10 years.
Date: February 08 , 2019
1)Were you aware of the SNC-Lavalin story in the current news? What was your reaction?
2) If you were the CFO of a company, and you found out that Lavalin was one of the bidders on a contract your company had put out for bids, would you think twice about awarding it to them ?
3) See page 134 in Wiley’s Financial Accounting: Tools for Business Decision-Making. What is the difference between an error in the financial statements and fraud?
Description: Really – no really – apparently there was a time when airline travel was fun. One of the things that has taken some of the fun out of flying is the growing bevy of fees. Fees for Luggage. Fees for a cold beverage. More fees to pick your seat. All these fees keep creeping into our wallets. Now Southwest Airlines, a long-time no frills flight provider, has fuelled speculation it may be searching for extra fees after its CEO said revenue was “under construction.” Baggage fees alone generate billions in revenue for US airlines.
Date: February 08 , 2019
1) Have you ever wondered where all these extra fees come from? What do you think has prompted a strategy for airlines to lower their base fares and crank up the extra fees?
2) If you were an accountant advising Southwest Airlines on what extra fees it might charge, what type of data would you perhaps provide?
3) Take a look at the vignette about Westjet on page 463 of Wiley’s Financial Accounting: Tools for Business Decision-Making. See if you can find an extra fee Westjet created to generate additional revenue.
Description: While the Patriots and the Rams draw the focus for the Super Bowl in Atlanta, take a moment to consider another big contest that has been playing out all week: Coke versus Pepsi. Pepsi is an official Super Bowl sponsor, so it should normally get all the attention inside the zone surrounding the Super Bowl venue. That’s what it pays the NFL all that money for. But because Coke is headquartered in Atlanta, the company already had a museum facility with plenty of Coke profile inside the NFL’s “exclusive” Pepsi territory. Pepsi seems to be taking it all in stride, posting a billboard with the message “Pepsi in Atlanta. How refreshing.”
Date: January 30 , 2019
Discussion points: 1) Coke and Pepsi are powerful brands. Which do you prefer? How about your classmates?
2) What could you do to attempt to calculate the value of a brand like Pepsi or Coke?
3) Wiley’s Financial Accounting: Tools for Business Decision-Making talks about trademarks like Coke and Pepsi on pages 485-6. What condition must be present for a company to put a value on this intangible asset called a trademark?
Description: In what might be called an ethics survey of Canadian tax preparers, the Canada Revenue Agency has some surprising results. While about 60% do feel failing to report cash income is a serious issue, about half of those preparers don’t see much wrong about a charity giving an inflated tax receipt. Professor Ian Lee from Carleton University in Ottawa questions the findings though, pointing to the relatively small sample size. Further, he believes the professional ethics process of Ontario’s CPAs would prevent most of its members from cheating in preparing returns.
Date: January 29 , 2019
1) What did you find to be the most interesting result from this survey?
2) Try doing your own in-class survey of students’ attitudes using the five bullet points that tell us the survey results. For example, question one, using the first bullet could be “How do you feel about someone receiving cash for work performed and not declaring the income?”
3) The Ottawa Citizen article tells us “only 44 per cent of those polled agreed with the statement that ‘taxes help the government do worthwhile things.’” How might this belief influence a tax practitioner’s view on fraud? (Hint: Check out the fraud triangle in Wiley’s Auditing: A Practical Approach, for a possible clue.)