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:

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

The idea for Subway’s $5 footlong sandwich was conceived by a Subway restaurant owner over 5 years ago.  The sandwich is now a cornerstone of Subway’s marketing campaign.  In fact, some people within Subway believe that every time a competitor markets a $5 product, the customer thinks of Subway.

As a direct result of offering a $5 footlong (not $4.99), weekend sales increased anywhere from 17 – 30%.  The idea was test marketed and then later rolled out across the country.


1. Which costs are likely the most important costs for a local Subway restaurant?  Which costs are likely the most important costs for the Subway?

2. Describe three ways that CVP analysis might be used by Subway to meet different profit goals.

3. Describe how activity-based costing might be beneficial to Subway.

(Retrievable online at

Posted by & filed under Accounting Principles, Video Updates.

“Learning to sing from Beyoncé” is the way one student explains how it feels to learn about personal finance from the co-founder of a multi-billion dollar hedge fund.  The former banker and trader takes time to teach students from Harlem about personal finance.  His theme is personal responsibility and he believes that the biggest obstacle facing these students is access to knowledge.  So, he’s taken matters into his own hands by meeting with a group of sophomore, junior, and senior students from a local high school.

They meet once a week after school to learn about mortgages and investing.  But perhaps the most important thing they’re learning is that it’s OK, and even desirable, to ask questions.

Their experiences are giving them to confidence to make good decisions, to ask questions, and to seek additional knowledge.  Their success will ultimately be measured by their financial happiness and the control they’re able to exert over their financial futures.


1. Name three areas of personal finance (credit cards, mortgages, investing, etc.) you’d like to know more about.  What can you do to expand your knowledge in these areas?

2. Have you ever considered volunteering your time to help others in your community?  Has this article changed your mind?

3. The students in the video share what they’re learning with their parents.  How can you share what you’re learning in college with your parents?  What have your parents taught you about personal finance?

(Retrievable online at

Posted by & filed under Accounting Principles, Financial Accounting, Fraud Accounting.

“White collar crime” is commonly defined as a crime committed by a respectable person, usually with an education and a higher standing in society, in the performance of his or her occupation or area of expertise. It is frequently considered a victimless crime as no one is physically injured in the execution of the crime. If an individual defrauds a bank or an insurance company out of funds, who is hurt? Robert and Kathy Lang Albright, victims of a temporary bookkeeper who embezzled hundreds of thousands of dollars from their business, learned that many people are hurt. Because of the crime, they were forced to let 20 people go from their small company that manufactures faux plants for hotels, offices, and other businesses. Embezzlers, explains Kathy Albright, are “financial assassins”.

1. Who are the victims of the alleged fraud committed against Atrium Foliage?

2. What elements of trust and action allowed the alleged crime to persist through the duration of eighteen months?

3. The alleged theft through embezzlement exceeded $850,000 and the lawsuit for forgery and fraud is for at least $95,577. How is this difference explainable or justifiable?

(Retrievable online at

Posted by & filed under Financial Accounting, Video Updates.

A working knowledge of accounting is helpful for almost any career endeavor. In real estate, for example, brokers must have a thorough understanding of the numbers involved in the decision-making process.  Real estate brokers traditionally determine whether a buyer can make payments to a bank, identify tax benefits of a purchase, and even determine whether cash flow from an industrial property justifies a purchase price. The accounting expertise of real estate brokers is now finding relevance in new frontiers like Second Life, an online virtual community. In Second Life, real estate entrepreneurs are applying their accounting knowledge when they rent real estate “sim” islands to other Second Life avatars. With their understanding of accounting, entrepreneurs are making real-world profits and finding financial success in a non-traditional market.

1. What ethical concerns might a seller of “sim” real estate consider?

2. Are the real estate stakeholders of a “sim” transaction the same as the stakeholders in the real world?

(Retrievable online at