Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

OK. For all you accountants, here’s another acronym.  What does FIFA stand for? Well, it’s not an inventory method, but refers to the governing organization for the world’s biggest athletic event this summer ( the World Cup). Even if you’re not a fan, you can’t ignore World Cup fever that is sweeping the globe this summer. Tongue-in-cheek, author Daniel Braddock thinks that public accounting can learn a thing or two from these games.

Questions:

1. Check out Deloitte’s World Cup Fantasy Football League page.  Explain why you think the Big 4 firm started this initiative? (See http://deloitte.fantasyleague.com/Index.aspx)

2. Who is PricewaterhouseCoopers pick for the winner of the World Cup?  Do you agree? Why or why not?

3. Summarize what Braddock’s three points have to do with public accounting. What does this say to you about a career in the Big 4?

Source:

Braddock, Daniel. (2010).  Three Things Public Accounting Can Learn from the World Cup. Going Concern, June 17 (Retrievable online at http://goingconcern.com/2010/06/three-things-public-accounting-can-learn-from-the-world-cup/#more-12860)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Video Updates.

Barry Minkow was the famed entrepreneur who started ZZZZ Best in the 1980’s, only to have it collapse in 1987 under the weight of a discovered Ponzi scheme.  Minkow was convicted of fraud, among other charges, and sentenced to 25 years in prison, but only served 7 years. Minkow now is head of the Fraud Discovery Institute, a company which searches for fraudulent corporate activities and highlights the allegations through its website. Minkow and his firm, the Fraud Discovery Institute, are currently the subject of a probe by the U.S. Securities and Exchange Commission. The subpoenas ask, among other things, for all communications regarding six companies FDI has criticized: InterOil Corp. (IOC), Lennar Corp. (LEN, LENB), Pre-Paid Legal Services Inc. (PPD), Medifast Inc. (MED), Herbalife Ltd. (HLF) and Usana Health Sciences Inc. (USNA). In addition, the subpoenas want information about Minkow’s involvement with Whitney Tilson, who runs a $135-million New York hedge fund. It also appears that the SEC is focused on the fact that Minkow acknowledges that he takes short positions in some of the companies he criticizes. The SEC states the “investigation is a non-public, fact-finding inquiry,” intended “to determine whether there have been any violations of the federal securities laws,” according to copies of three of the subpoenas and related materials reviewed by Dow Jones Newswires. Minkow, however, believes the probe is politically motivated.

Questions:

1.  What is a short position?

2. What can you find out about Pre-Paid-Legal Services, Inc?  Are there any “red flags” noted in the video or your research that would raise your level of skepticism about a suspected fraud?

3. Research the other companies that the SEC named in the FDI subpoenas.  Based on your research, is there anything to raise your level of skepticism about these firms and financial fraud?

 

Source:

Murphy, M. (2010) SEC Probe Into Barry Minkow’s Fraud Discovery Institute Continues. Wall Street Journal, June 11 (Retrievable online at http://online.wsj.com/article/BT-CO-20100611-709043.html or

http://webcache.googleusercontent.com/search?q=cache:qRCsAwh54OYJ:online.wsj.com/article/BT-CO-20100611-709043.html+SEC+Probe+Into+Barry+Minkow%E2%80%99s+Fraud+Discovery+Institute+Continues&cd=1&hl=en&ct=clnk&gl=us)

Video. (2008). Former US Attorney unveils the fraud of Pre-paid Legal, Fraud Discovery Institute (Retrievable online at http://www.youtube.com/watch?v=-g6exqWj0rs)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

According to Adrienne Gonzalez, you need to avoid the hype surrounding upcoming changes in the CPA exam and map out a strategy that uses your strengths.  One change that is occurring is the format of simulations, which will be trimmed down to “simlets.” Instead of getting one topic, you have a better chance of doing well because they will be smaller and consist of several different topics. One thing that will not change is the rolling 18 month period which allows you to keep credit for whatever you have passed in the last 18 months. Another thing that will not change is that the exam changes twice a year. As the AICPA continues to adjust the format, remember that a focus on planned study schedules  and debits on the left and credits on the right are the key to passing the exam.

Questions:

1.  What are the two biggest changes for the CPA exam that Gonzalez sees for 2011?

2.  Based on these changes, what strategy does Gonzalez suggest?

3.  What hypes does Gonzalez say to avoid?

Source:

Gonzalez, Adrienne. (2010). If I Pass CPA Exam Parts in 2010, Will I Have to Pass Them Again in 2011?  Going Concern, June 18. (Retrievable online at http://goingconcern.com/2010/06/if-i-pass-cpa-exam-parts-in-2010-will-i-have-to-pass-them-again-in-2011/#more-12870)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting, Video Updates.

Satyam Computer Services, a leading Indian outsourcing company that served more than a third of the Fortune 500 companies, was at the heart of a huge 2009 fraud perpetrated through the significant inflation of earnings and falsification of accounts and assets for a number of years.  Chairman, Ramalinga Raju, resigned  in January 2009 after revealing that 94 percent or about $1.04 billion in assets were nonexistent and revenue was actually 20 percent lower than that reported.

Questions:

1. Who were Satyam’s auditors? What are some of the audit procedures that should have helped in the detection of this fraud?
 
2. What prior incident led to scrutiny of the company in October 2008?  What does this indicate to you about the corporate culture of the company?

3. Is Satyam still in business?  Provide a brief summary of its demise. What happened to the Satyam’s Chairman?

Sources:

Khanzode, R. (2010). Satyam Not out of Woods, Likely to Seek Time for Audited Results. The Financial Express, June 7. (Retrievable online at http://www.financialexpress.com/news/satyam-not-out-of-woods-likely-to-seek-time-for-audited-results/630308/)

Video (January 8, 2009). Satyam Auditor PwC Under Lens. (Retrievable online at http://www.youtube.com/watch?v=c_TvuhOtln0&feature=related)

 Timmons, H. (2009). Satyam Chief Admits Huge Fraud, New York Times, January 7 (Retrievable online at http://www.nytimes.com/2009/01/08/business/worldbusiness/08satyam.html)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting.

In an extended expose, the New York Magazine reported that Bernard Madoff described his scheme as a real nightmare to him, as if he were the real victim, and complained about little old ladies bugging him for money. The article goes on to describe his celebrity in prison among the other inmates and his “freedom” in prison.

Questions:

1.  What kind of scheme did Bernie Madoff use to defraud his investors? What is the estimated amount that he stole from investors?  What was his sentence?

2.  What did Bernie Madoff claim that the SEC failed to do that would have uncovered his scheme? Do you agree?

3. What trait does Bernie Madoff continue to exhibit that is common to fraudsters? Do you think the sentence fits the crime for this case?

Source: 

Fishman, Steve. (2010). Bernie Madoff, Free At Last, New York Magazine, June 6. (Retrievable online at http://nymag.com/news/crimelaw/66468/)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

When the IASB and FASB began the convergence process in 2002, they considered R & D as a high-priority project, where differences between US GAAP and IFRS were seen as particularly straightforward. However, as this article notes, still no consensus has been reached because IASB’s R&D treatment  appears to defeat comparability in the eyes of the FASB.

Questions:

1. The author refers to SFAS 2 as support for R & D reporting under U.S. GAAP.  What is SFAS 2?

2.  What are the capitalization criteria from IAS 9 that became part of IAS 38 to distinguish research costs from development costs?

3.   Briefly summarize the article’s presentation of why FASB ruled  in the 1970’s that all R&D expenditures must go straight to the income statement.

Source:

Selling, Tom (2010). Failed Convergence of R & D Accounting: Only Politicians and Opportunists Would Have Downplayed the Implications, The Accounting Onion, June 5 (Retrievable online at http://accountingonion.typepad.com/theaccountingonion/2010/06/failed-convergence-of-rd-accounting-only-politicians-and-opportunists-would-have-downplayed-the-implications.html)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Video Updates.

Over the next five years, Wal-Mart plans to donate about 1.1 billion pounds of food to food banks and provide $250 million to help them buy refrigerated trucks, improve storage and develop better logistics.

The plan to contribute $2 billion in cash and food to the nation’s food banks is considered to be one of the largest corporate gifts on record.

Wal-Mart began taking on hunger as a cause in 2005, when it distributed 9.9 million pounds of food to food banks; last year, it provided 116.1 million pounds of food. The company also has donated the services of its staff to help food banks improve lighting and refrigeration, and develop ways to increase the amount of fresh food on their shelves.

Questions:

1.According to Robert Midler, when are merchandisers eligible for enhanced deductions for a charitable contribution of inventory under the U.S. tax code?  Would Wal-Mart’s effort qualify?

2. Using the video, can you identify which accounts of a merchandiser would be affected when making the journal entries for donated inventory? 

3. Assuming that Wal-Mart’s revenue on the donated food would be $1.5 Billion, its cost would be $0.875 Billion, $250 million was donated for trucks and $250 million was donated through services of Wal-Mart staff, create the journal entries for the cash merchandise and service donation for the financial statements.

Source:

Midler, Robert (1993). Tax benefits of donating inventory – some donations may also qualify for enhanced deduction.The Tax Adviser, January 1 (Retrievable online at http://www.allbusiness.com/accounting-reporting/corporate-taxes/351023-1.html)

Strom, Stephanie (2010). Wal-Mart donates $2 billion to food banks, New York Times, May 13. (Retrievable online at http://www.postbulletin.com/newsmanager/templates/localnews_story.asp?z=7&a=452224)

Nerdenterprises.  (2010). “Accounting For Donated Inventory In QuickBooks video,” May 4 (Retrievable online at http://www.youtube.com/watch?v=B9-N2ZmUMhs)

Posted by & filed under Accounting Principles, Advanced Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting.

On Wednesday, May 26, 2010, the FASB released an exposure draft for the purposes of improving accounting for financial instruments. The new rules, projected to take effect in 2013, incorporate both amortized cost and fair value information about financial instruments held for collection or payment of cash flows.

Questions:

1. According to the article, how does the proposal plan to provide more timely information for financial statement users about anticipated credit losses?

2. What is the deadline for comments and when does FASB plan to hold roundtable meetings?

3. How many members are on the AICPA’s Accounting Standards Executive Committee, that has weighed in on the proposal and who are those represented on the committee?

Source:

Lamoreaux, Matthew (2010). FASB Proposes Comprehensive Changes to Financial Instruments Accounting, Journal of Accountancy, May 26 (Retrievable online at http://www.journalofaccountancy.com/Web/20102977.htm)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, International Accounting.

The head of the Financial Accounting Standards Board, which sets U.S. accounting rules, said June 1, 2010, that he does not expect FASB to meet a June 30, 2011 deadline for convergence with international accounting rules, as requested by the G20 group of industrial and emerging countries. According to FASB chairman, Robert Herz, changes that delay the completion date by about six months will soon be announced to allow for greater public comment on the boards’ proposals.

Questions:

1. According to the article, what controversial proposal was released during the last week of May?

2. According to the article, how long would the boards have had available to release 10 standards and still meet a June 2011 deadline with final standards, given the due process typically followed?

3. According to the FEI, what is the maximum number of proposals that the FASB has ever released at one time for public comment?

Source:

Chasan, Emily. (2010) Accounting Rulemakers to Delay Convergence, Reuters, U.S., June 1 (Retrievable online at http://www.reuters.com/article/idUSTRE6505KE20100601)

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

Unemployed Individuals can increase their attractiveness to prospective employers by knowing about  certain tax breaks that employers can secure by hiring them. One group , National Tax Credit Group, LLC, is promoting this advantage by creating a “Tax Credit Card” which they issue to prospective employees after screening them for hiring credit eligibility. This article presents information on how employees can highlight the applicable hiring credit on their resume, as well as work the issue into an interview to improve their chances of being hired.

Questions:

1.  According to the article, which states have the most attractive state-level tax credits for hiring qualified employees?

2. What is the range of tax credits per employee hired?

3.  From a financial accounting standpoint, which journal entries will be impacted by the tax credits? Explain.

Source:

Christian, Blake. (2010). “Unemployed can use tax laws to secure a job,” Education and Careers: Accounting WEB, May 21 (Retrievable online at http://www.accountingweb.com/topic/education-careers/unemployed-can-use-tax-laws-secure-job)