Alienating Customers?

Microsoft confirmed it will acquire the studio that created the hit “sandbox” game Minecraft for $2.5 billion, a move that could help bolster the company’s Xbox and mobile ambitions.

Questions:
1. According to the article, how does this acquisition strengthen Microsoft’s battle with other technology driven companies?
2. Why does the video hypothesize that Microsoft is alienating Minecraft customers?
3. Read Mark Persson’s statement about leaving Mojang once the acquisition is completed. Although Mark says that he is not a CEO and not an entrepreneur, research whether or not this has this been a typical move to leave the company, once Microsoft acquires your company. Discuss.

Source:
Molina, B. (2014). Microsoft to acquire Minecraft maker Mojang for $2.5B. USA Today, Sep. 15 (Retrievable at http://www.usatoday.com/story/tech/gaming/2014/09/15/microsoft-minecraft/15658383/)



Payroll Accounting Fraud

A former accountant for the University of Sioux Falls has been indicted for wire fraud for reportedly collecting more than $25,200 in unearned paychecks. Brent Alan Fowler, 52, faces 20 counts of wire fraud for individual payroll deposits.

Questions:
1. What is the potential jail time for Mr. Fowler, if he receives the maximum punishment?
2. Hypothesize how Mr. Fowler committed this fraud. Explain.
3. Citing the fraud triangle, what are some of the reasons that he may have for committing this fraud?
4. Assuming that Mr. Fowler had a supervisor, what red flags could he or she have taken note of?
5. What internal controls were probably missing?

Source:
Hult, J. (2014) Former USF accountant indicted for wire fraud. Argus Leader, Sep. 10 (Retrievable online at http://www.argusleader.com/story/news/crime/2014/09/10/former-usf-accountant-indicted-wire-fraud/15396541/)
Bounced Check from Mortgage settlement



European Backlash!

According to the New York Times, across Europe, Google has been under fire. This reflects the broader challenges facing American technology companies. Fairly or not, Google has become a glaring proxy for criticism of an intrusive American government and concern over America’s unmatched technology dominance.

Questions:

1. What other U.S. tech companies are being carefully scrutinized in Europe?
2. Do you agree with the landmark European court ruling this year forcing search providers to purge personal information for people making a request?
3. Which company has long targeted Google?
4. How would you relate this digital privacy legislation to an audit trail of documentation?
5. What is the Paris Declaration of May 15, 2014?

Source:
Hakim, D. (2014) Google Is Target of European Backlash on U.S. Tech Dominance. The New York Times, Sep. 8 (Retrievable online at http://www.nytimes.com/2014/09/09/technology/google-is-target-of-european-backlash-on-us-tech-dominance.html?hp&action=click&pgtype=Homepage&version=LargeMediaHeadlineSum&module=photo-spot-region&region=top-news&WT.nav=top-news&_r=0)
Proxy fight



Watch Out! They Know Where You Live!

Eric Merklein, 67, didn’t know he had outstanding student debt until he received his first Social Security check. He thought that his grandmother had paid it off. Unfortunately, Merklein is among the more than 2 million Americans age 60 and older carrying student debt, which is up from about 700,000 in 2005.

Questions:

1. What was Mr. Merklein’s original student loan 40 years ago? What is it now? What percentage increase has his original loan seen? Would this be simple or compounded interest?
2. If the Treasury Department is deducting amounts from Social Security checks for old student loans, how can a person get these automatic deductions to stop?
3. Assume that Debbie Crotinger, 55, borrowed $10,000 on January 1, 1990, and on January 1, 2014 owed approximately 7% per year in back interest and penalties, how much would her debt be as of January 1, 2014? Based on the rate of wage garnishment listed in the article, how many years will it take Debbie to pay off her student loan?

Source:

Kitroeff, N. (2014). Student Debt Threatens the Safety Net for Elderly Americans. BusinessWeek, Aug. 21 (Retrievable online at http://www.businessweek.com/articles/2014-08-12/more-elderly-americans-are-struggling-with-student-loan-debt#r=hp-ls)



The Justice System and The Costs of Being Poor

According to Mr. Edsall, the new growth industry, on the backs of the poor, seems to be private probation, correctional, and detention companies. In fact, Corrections Corporation of America, is listed on the New York Stock Exchange and reported revenues of $1.69 billion in 2013.

Questions:
1. This collection of private probation companies and the services they offer appeal to politicians and public officials for a number of reasons. What are they?
2. As National Public Radio reported in May, services that “were once free [in the judicial system], including those that are constitutionally required,” are now frequently billed to offenders. What are some of these costs?
3. Why does this new system of offender-funded law enforcement create a vicious circle? Discuss your opinion of this Op-Ed and the equity of these systems.
4. Perform a SWOT analysis of qualitative effects of the prison industrial complex.

Source:
Edsall, T.B. (2014). The Expanding World of Poverty Capitalism. The New York Times, Aug. 30 (Retrievable online at http://www.nytimes.com/2014/08/27/opinion/thomas-edsall-the-expanding-world-of-poverty-capitalism.html?hp&action=click&pgtype=Homepage&module=c-column-top-span-region&region=c-column-top-span-region&WT.nav=c-column-top-span-region)



Rip Off: We Work Hard for the Money!

Although Guadalupe Rangel worked nearly 70 hours per week, he never saw any overtime pay at the Schneider warehouse in Mira Loma, California. As a result he joined a lawsuit involving hundreds of warehouse workers where he will likely receive more than $20,000 in back pay as part of the recent $21 million legal settlement the national trucking company.

Questions:
1. Why does David Weil, the director of the federal Labor Department’s wage and hour division, think that wage theft is increasing?
2. How much wage theft has Mr. Weil’s agency found since 2010?
3. What characteristics of wage theft did the article point to? In other words, what specific industries, states, individuals, etc. are typically affected? Discuss why.
4. Besides not paying overtime, what other wage theft practices were mentioned in the article?
5. If Mr. Rangel is not getting paid overtime, what other state and federal agencies are also being shorted as a result?

Source:

Greenhouse, S. (2014).More Workers Are Claiming ‘Wage Theft’ The New York Times, Aug. 31 (Retrievable online at http://www.nytimes.com/2014/09/01/business/more-workers-are-claiming-wage-theft.html?hp&action=click&pgtype=Homepage&version=LedeSum&module=first-column-region&region=top-news&WT.nav=top-news&_r=1)

[In this Photo: Guadalupe Salazar, a McDonald’s cashier who says her paychecks were missing overtime wages.]
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An expensive proposition

Currently, it is estimated that an average middle-income family in the United States can expect to spend about $245,000 over 18 years to raise a child. This is from the Department of Agriculture’s annual “Cost of Raising a Child” report.

Questions:
1. If you adjust for inflation, how much more will an average middle-income family in the United States spend on each child?
2. What are the two largest costs and approximately how many dollars are each? Discuss whether these are fixed, mixed or variable costs and give examples.
3. How much less do larger families, those with three or more children, spend per child than families with two children, (a) in percentage, (b) in current dollars, (c) in inflated dollars?

Source:

Krasny, R. (2014). Cost of raising a child in U.S. tops $245,000, USDA says. Reuters.com, Aug. 18 (Retrievable online at http://www.reuters.com/article/2014/08/18/us-usa-economy-children-idUSKBN0GI1DJ20140818)

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Scamming scammers: The underbelly of debt collection

From 2006 to 2009, the nation’s top nine debt buyers purchased almost 90 million consumer accounts with more than $140 billion in “face value.” This article details the saga of debt accounts that continue to be stolen, double-sold or otherwise exchanged without accurate supporting information by “debt collectors, including statements or copies of original signed contracts. Although regulators, like the FTC, are starting to consider more policing of this area, unfortunately consumers continue to be exploited.

Questions:
1. What did the debt buyer pay for this opportunity to collect?
2. Based on the information in the intro and your answer in #1, what amount of collection would they need to generate a target gross profit of $10,000?
3. Assume that fixed expenses for a debt collector are $100,000, what amount of debts would the collector need to recover to break-even?
4. What variables did the article say were important to collecting old debt?
5. From an accounting standpoint, how should collection agencies account for paper that cannot be collected?

Source:
Halpern, J. (2014). Paper boys: Inside the dark, labyrinthine, and extremely lucrative world of consumer debt collection. The New York Times, Aug. 15 (Retrievable online at

http://www.nytimes.com/interactive/2014/08/15/magazine/bad-paper-debt-collector.html?hp&action=click&pgtype=Homepage&version=LargeMediaHeadlineSum&module=photo-spot-region&region=photo-spot&WT.nav=photo-spot)

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Fraudsters are always looking for a way to rip off the Government

This article details a wheelchair scam that was designed to exploit blind spots in Medicare, which often pays insurance claims without checking them first. The fraud begins with criminals disguised as medical-supply companies.

Questions:
1. Based on the article, which major internal control allowed this fraud to happen?
2. What type of control slowed down the fraud? Even with this control, about how many power wheelchairs are estimated to be distributed fraudulently and what do you calculate is the approximate amount paid for each?
3. What other area is becoming a problem for fraudulent reimbursement? How would you propose to implement new controls for this area?
4. If a victim of this scam resells the powered wheelchair, who should be prosecuted for fraud?
5. What red flags and forensic accounting techniques should have been used and acted upon by Medicare sooner?

Source:
Farenthold, D. (2014). A Medicare scam that just kept rolling. The Washington Post, Aug. 16 (Retrievable online at http://www.washingtonpost.com/sf/national/2014/08/16/a-medicare-scam-that-just-kept-rolling/?hpid=z1)

CBS News Video on Youtube. (2013). Medicare Fraud: Critics say powered wheelchairs a rip off. CBS, January 7 (Retrievable online at https://www.youtube.com/watch?v=vBtIYVKneKE)



Living without Water

Thousands of people in bankrupt Detroit haven’t paid their water bills. Even some businesses have skipped payment. How is the bankrupt city dealing with the most basic of problems — getting people to pay their bills?

Questions:
1. Detroit is the poster child for shutting off water to customers delinquent on their bills. Even though this has drawn fire from all over the world, according to John Wisely, what other cities have been doing this also? What alternatives to shut-off do you think that the cities have from a business model point of view?
2. What organizations have criticized the shut-offs? What country is planning a convoy of water transportation to protest the shut-offs? Do you agree with the policy? Discuss.
3. According to Bill Johnson, spokesman for the Detroit water department, who is the shut-off program targeting? What percentage of customers whose water is shut off typically pay their bills in full within a day or two?
4. According to the policy, Bill Johnson noted that if anyone that comes to the department with a demonstrated financial hardship, their water won’t be turned off. Although they do not detail this, what do you think would constitute a demonstrated financial hardship?

Sources:

NPR. (2014). Episode 559: Detroit’s Water Bill. NPR.org, Aug. 8 (Retrievable online at http://www.npr.org/blogs/money/2014/08/08/338068996/episode-559-detroits-water-bill)

Wisely, J. (2014). Detroit not alone in shutting off water for unpaid bills. USA Today, July 27 (Retrievable online at http://www.usatoday.com/story/news/nation/2014/07/27/detroit-not-alone-in-shutting-off-water-for-unpaid-bills/13228207/)

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