Posted by & filed under Accounting Principles, All Articles, Financial Accounting, Financial Reporting and Analysis.

Wisconsin lawmakers agreed on Thursday, April 22, 2010, to regulate payday lenders. Wisconsin had been the only state not to regulate this industry, which consumer advocates said allowed its rapid growth and trapped too many borrowers who take out short-term loans with high interest rates in a cycle of debt.


1. What were some provisions of the plan?
2. According to the plan, if a person’s monthly income was $5,000, how much could he/she borrow from a payday lender?
3. Why do you think that Wisconsin was the last state to pass some type of regulation on this industry? What are the regulations on payday lenders in your state?
4. If a person wanted to take out a short-term auto title loan with a payday lender in the state of Wisconsin and had a car with a value of $14,000, how much could they borrow under this new regulation?

Bauer, S. (2010). Wisconsin Lawmakers Agree to Regulate Payday Lenders, Associated Press, April 23 (Retrievable online at

Posted by & filed under Accounting Principles, All Articles, Cost Accounting, Managerial Accounting.

Tracking efforts in companies like Wal-Mart, Hewlett-Packard and Clorox, authors Ram Nidumulo, C.K. Prahalad, and M.R. Rangaswami, identified a five-stage process that will benefit companies as they navigate through the adoption of green business models.  In the article, the authors contend that early adopters of this process will develop competencies that will be difficult for their competitors to match. They also submit that adoption of these processes by corporate leaders will be key to real change within our economy.


1. If consumers will not pay more for eco-friendly products, where do the authors suggest that profitability will come from?

2. Give a specific example of how the authors point to redesigning operations can save money.

3.  How would you define “greenwashing?” Is it a good thing or a bad thing?  Explain.

 Source: Nidumulo, Ram, C.K. Prahalad, and M.R. Rangaswami (2009). Why Sustainability Is Now the Key Driver of Innovation. Harvard Business Review, September, pp. 3-10 (Retrievable at

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

Late Payments Matter

According to new research, approximately 4,000 small and medium sized firms in the U.K. collapsed in 2008 due to late payments by customers. This amounted to approximately 62 billion pounds that were more than 30 days late and of this 15.5 billion that were more than 120 days overdue. For more than twelve percent of these firms, over 60% of all their invoices are paid late.


1.  What can businesses do to alleviate the problems of late payments? 

2.  Explain the cash flow implications of this problem. 

3. What type of financial ratios could a company perform in order to better understand the severity of this problem? 

4.  How does the current “credit squeeze” add to the woes for both businesses and consumers?

Source: Murchie, Kay. (2010) Firms collapse due to late payments, according to research. Financial Markets – Economy News, April 15 (Retrievable at

Posted by & filed under Accounting Principles, All Articles, Managerial Accounting, Video Updates.

Chris Mittelstaedt, owner of The FruitGuys, has turned his local business into a national operation by changing strategy during the recession through investment in technology and the restructuring of his operations.


1.  Based on the video, what were some of the things that Chris did to cut costs?  What disaster almost bankrupted his company?

2.   Look up the topic of “corporate wellness.” Investigate what links the company has to the concept of “corporate wellness.” Discuss how this could be important and profitable part of the company’s business strategy.

3. Look up the topic of “green business” and “sustainability.”  Is this an important part of the business strategy for the Fruit Guys?  Explain how it can impact profitability.

4. Chris mentioned that he took a “MASH unit approach” to the business.  What does this mean?  How can it translate into profits?

Source: BNET Staff, The FruitGuys: Finding Opportunity in a Recession (2010 Video) Retrievable at;n-video

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Financial Accounting, Fraud Accounting.

The Securities and Exchange Commission is asking public-company CFOs for better disclosures and additional information about repurchase agreements, or repos, which are the same transactions that Lehman Brothers used to make its balance sheet look healthy before the investment bank collapsed into bankruptcy. Based on company responses, the SEC could ask issuers to amend their filings or modify disclosures in future filings.

1. Explain why this article says that Lehman’s Repo 105 transactions are destined to take a prominent place in the annals of accounting scandals.
2. Is this the first time the SEC has questioned companies about the way they apply asset-transfer accounting rules? Explain.
3. What type of ratios do these repos affect? Give an example of how this might work.

Source: Leone, M. (2010). SEC to CFOs: More Repo Disclosure, March 31, 2010 (Retrievable at

Posted by & filed under All Articles, Auditing, Financial Accounting, Fraud Accounting, Video Updates.

Clearly laying out key ideas and arguments that support divorce proceedings are becoming a critical success factor for forensic accountants who consult in this area. As author, Dan Roam The Back of the Napkin by Dan Roam asserts visual thinking is critical in the business world and forensic accounting is no exception.  For the forensic accountant, specializing in divorce consulting, being able to effectively create visual tools such as tables, charts, diagrams, and graphs can help make and emphasize key points that are critical for laying out financial information before a judge. 


1.  What are examples of the areas where a CPA and forensic accountant can help develop and illustrate financial matters in a divorce?  What basic financial accounting concepts are important to understand for an accountant specializing in this area?

2.  Explain why communication skills are so important for forensic accountants that specialize in divorce engagements.

3.  Why would a forensic accountant need to use the imagination part of Dan Roam’s concept of visual thinking? 

Source: Dow, Alexis. (2009). When and How to Use a Forensic Accountant in Your Divorce. THE OREGON DIVORCE BLOG October 26, 2009 (Retrievable at
Roam, Dan (2010). The Back of the Napkin promo video. BNET (Retrievable at )

Posted by & filed under Accounting Principles, All Articles, Financial Accounting, Fraud Accounting, Intermediate Accounting.

In recent efforts, the AICPA is promoting forensic accounting skills to CPA firms and university professors. As part of this push, the Institute has published a new report entitled, “Characteristics and Skills of the Forensic Accountant, which presents qualities that surveyed attorneys, forensic CPAs and academics see as critical for the forensic accounting discipline, particularly in the wake of the economic crisis. This report is available at

1. After reading the article, how would you explain the career of a forensic accountant to one of your friends?
2. Which two essential values of CPA’s does AICPA chairman Robert Harris point to as critical for forensic accounting?
3. Explain why you think there were differences in how the three groups of people surveyed by the AICPA ranked the core skills needed by forensic accountants.

Source: WebCPA staff. (2010). AICPA Pushes for More Forensic Accountants, April 8, 2010, WebCPA – NEWSWIRE (Retrievable at

Posted by & filed under Accounting Principles, Financial Accounting, Video Updates.

It is not an accident that Starbucks is the leading consumer brand on Facebook. CEO and Chairman Howard Schultz explains that Starbucks gained prominence on Facebook by making a significant commitment to investing in social media. Executives at Starbucks have learned that they can’t push a product on a consumer. Rather, they must engage consumers in conversation so that the consumer can trust the source. Social media provides the ideal platform for this conversation. As a result, social media platforms such as Facebook and Twitter have become an integral part of business at Starbucks.

1. What sort of costs do you think Starbucks incurred when CEO and Chairman Howard Schultz said Starbucks made a very significant investment in the people and the category of social media?
2. How do you think the costs discussed in Question #1 were accounted for and why? That is, were costs expensed or capitalized and what is the rationale for your answer?
3. The reporter says Twitter is fun and interesting, but that it’s difficult to monetize. What is meant by “monetizing” in this context? How is it important in terms of how Starbucks accounts for the costs associated with Twitter and Facebook?

(Retrievable online at:

Posted by & filed under Auditing, Fraud Accounting, Intermediate Accounting.

There are numerous methods of skimming and many reasons why it is done. This article walks you through one civil case resolved by a forensic accountant and highlights the difference between a criminal case and civil case. It also addresses numerous types of skimming and how they are perpetuated and caught.

1. What is the difference in the decision making process in criminal case and a civil case? What does this difference mean?

2.  Skimming can occur before or after the recognition of revenues. What are some of the common ways revenue skimming occurs and what are some of the effective ways to combat it?

3.  Lapping is a common concealment technique which is usually associated with less sophisticated individuals. Why does the “educated criminal” shy away from lapping? What are the possible ways to keep lapping concealed after the perpetrator leaves the firm?

4.  What are some of the techniques used to detect skimming and how would you make their presence known to deter skimming?

(Joseph T. Wells, The CPA Journal Online. Retrievable online at

Posted by & filed under Accounting Principles, Managerial Accounting, Video Updates.

In response to growing awareness of obesity, the head of Sony Pictures is encouraging movie theater owners to sell healthier snacks in their theaters. While no one is proposing that movie watchers munch on broccoli or spinach while they enjoy a movie, healthier offerings such as dried apple chips and air-popped popcorn are being suggested. But not everyone agrees. Some people argue that splurging is OK when you’re out for an evening at the theater.
Since movies are in the business of promoting “image” they have a unique opportunity to influence peoples’ choices.

1. If movie theater owners begin to offer healthier snacks, what might be the impact on their profit margin?
2. If movie theater owners begin to offer healthier snacks, what types of extra costs could they expect to incur and why? (Hint: For example consider spoilage costs related to fresh fruits.)
3. If movie theater owners begin to offer healthier snacks, what sorts of promotions or tie-ins might movie theater owners be able to offer in order to increase their overall sales revenue?

(Retrievable online at: