Cooking the Books – TSA style?
May 10, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
This week, the House Committee on Oversight and Government Reform released information about the Transportation Security Administration wasting taxpayers’ money; this time they point to a Texas warehouse holding more than 5,000 pieces of security equipment, valued at upwards of $180 million.
Questions:
1. What percentage of equipment has been stored for more than one year?
2. Based on the information in the article and video, what recommendations would you make if you worked for the inspector general’s office?
3. Representative Issa thinks that the TSA has “cooked the books.” Based on your knowledge of accounting and red flags of fraud, do you agree or disagree? Provide your reasoning.
Source:
CNN videos. (2012). TSA Cooked the Books, CNN.com, May 9 (Retrievable online at www.cnn.com/video
Fox, L. (2012). TSA Puts Millions of Dollars of Equipment in Storage, U.S. News, May 9 (Retrievable online at http://www.usnews.com/news/articles/2012/05/09/tsa-puts-millions-of-dollars-of-equipment-in-storage)
Doctorow, C. (2012). TSA Waste and Corruption: The Greatest Hits, BoingBoing, May 9 (Retrievable online at http://boingboing.net/2012/05/09/tsa-waste-and-corruption-the.html)
Lunch Money Fraud
April 30, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
How low can you go? Otis Josey, a 54-year old Detroit man, allegedly told a pre-school girl that he worked at a radio station and was raising donations for a children’s hospital charity. In exchange for a donation, he would give the donor a gift card. Police say he literally cheated the 5-year old girl out of her $5 lunch money in exchange for a fake $20 gift card to Chuck E. Cheese.
Questions:
1. Read the article by Ray Martin. What is one of the most reported gift card scams?
2. What does Martin recommend that you should do with an unwanted gift card?
3. How do most companies recognize the revenue from gift cards? What journal entries are involved?
Sources:
NBC Video.(2012). Man accused of selling child fake Chuck E. Cheese gift card, NBC News, April 26 (Retrievable at http://video.msnbc.msn.com/nbc-news/47178295/#47178295)
Martin, R. (2011). Attention Shoppers: Avoid this Gift Card Scam. CBS News, December 15 (Retrievable online at http://www.cbsnews.com/8301-505145_162-57343690/attention-shoppers-avoid-this-gift-card-scam/)
Visit msnbc.com for breaking news, world news, and news about the economy
General Services Administration (GSA) Scandal
April 17, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
A hearing on an extravagant government conference in Las Vegas will enter its second day on Capitol Hill on Tuesday, April 17. During Monday’s session, a House committee heard from officials accused of wasting taxpayer money on fancy meals and over-the-top entertainment. The GSA inspector general, Brian Miller, says he believes the behavior he uncovered could possibly be criminal and he wants the Justice Department to investigate possible bribes and kickbacks.
Questions:
1. According to the video, what were some of the reasons for out-of-control spending?
2. Compare this government scandal to a similar corporate scandal. Discuss any differences or similarities.
3. What types of controls should have been in place to prevent this overspending situation?
4. What issues do identify as criminal offenses? Discuss.
Source:
MSNBC video. (2012). GSA Under Investigation for Frivolous Spending, April 16. (Retrievable online at http://www.msnbc.msn.com/id/31510813/ns/msnbc_tv-the_dylan_ratigan_show/#47066004)
Cordes, N. (2012). Bribes, kickbacks in GSA Scandal? CBS News, April 17 (Retrievable online at http://www.cbsnews.com/8301-505267_162-57415052/bribes-kickbacks-in-gsa-scandal/)
Visit msnbc.com for breaking news, world news, and news about the economy
Taken for a Ride When Trading in a Car
March 20, 2012 by LuAnn Bean
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, Uncategorized
Under the Dodd-Frank financial reform act, the Federal Trade Commission (FTC) is now going after auto dealers that imply to customer that they have no remaining debt obligation for trade-ins. Five dealers in four states (South Dakota, North Carolina, Connecticut and West Virginia) have already agreed to settlements that order them to stop running ads promising to pay off a customer’s loan on a trade-in.
Questions:
1. Explain the practice that the FTC is putting a stop to by using the journal entries that a dealer would make.
2. What percentage of new-car shoppers in 2011 traded in a car on which they had negative equity? Develop an example of this using T-accounts from the point of view of the car owner.
3. The FTC is accepting public comments on the proposed dealer settlements until what date?
Source: Singletary, M. (2012). Trading in a car? Don’t get taken for a ride. The Washington Post, March 17 (Retrievable online at http://www.washingtonpost.com/auto-dealers-take-trade-in-owners-for-a-ride/2012/03/12/gIQAT2sRJS_story.html)
TaxMasters Trouble
March 20, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
A Houston-based tax advisory firm filed for bankruptcy Sunday, a little more than one day before it was scheduled in court to defend itself against fraud accusations. Best known for a national advertising campaign that made company’s bearded, red-haired founder Patrick Cox a recognizable figure, the company spent about $14 million in national advertising in 2009.
Questions:
1. According to the article, what amounts of assets did the company have as compared to debt in the Chapter 11 filing? According to the article, what does the timing of the bankruptcy have to do with the lawsuits filed?
2. What states are suing TaxMasters? What is the company charged with?
3. Instead of speaking to highly qualified tax consultants, who do TaxMasters customers alledgedly speak with?
Source: Video: Oberg, T. (2012). TaxMasters Files Chapter 11 Bankruptcy., ABCNews.com, March 19 (Retrievable online at http://abclocal.go.com/ktrk/story?section=news/local&id=8586594)
Mosk, M. (2012). TaxMasters Files for Bankruptcy, ABCNews.com, March 19 (Retrievable online at http://abcnews.go.com/Blotter/taxmasters-files-bankruptcy/story?id=15932628)
Bathon, M. (2012) TaxMasters Files for Bankruptcy, Dogged by Fraud Suits. Bloomberg.com, March 19 (Retrievable online at http://www.bloomberg.com/news/2012-03-19/taxmasters-files-for-bankruptcy-dogged-by-fraud-suits-1-.html)
Crime of Grime OR Sign of the Times?
March 16, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
Tide is flying off the shelves, according to the Associated Press. Unfortunately, retailers are not seeing the profits from this familiar laundry soap. Instead, Tide has become a hot commodity among thieves at supermarkets and drugstores in at least some parts of the country. While the maker of Tide, Procter & Gamble, has been baffled about why the brand has gotten so much attention from thieves, law enforcement has discovered direct and indirect links to the exchange of the product for illegal drugs.
Questions:
1. If a retailer uses a perpetual inventory method to account for Tide, what should they also follow up with to determine any shortages in the product?
2. If shortages of Tide are found, how should they be accounted for? Give an example including journal entries.
3. How should the extra expenses of security tagging Tide be accounted for? Give an example including journal entries.
Sources:
Nuckols, B. (2012). Thieves Rolling Tide Detergent Out of Stores, Associated Press, March 15. (Retrievable online at http://abcnews.go.com/US/wireStory/thieves-rolling-tide-detergent-stores-15922603)
Youtube.com (Wane.com). (2012). Retailers speak out against odd Tide thefts, March 14.(Retrievable online at www.youtube.com)
Can you say: Tapping a Swiss Bank account with Other People’s Money?
March 7, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
A Houston jury Tuesday convicted Texas financier R. Allen Stanford on all but one of the charges he faced for allegedly bilking investors out of more than $7 billion in one of the largest Ponzi schemes in U.S. history.
Questions:
1. Why, if Allen Stanford faces up to 20 years in prison for the most serious charges but could he be imprisoned for much longer?
2. How did Mr. Stanford separate the investors from their money and when did the government shut down the scheme?
3. What red flags of fraud were mentioned in the article?
Source:
MSNBC.com Staff. (2012). Jury convicts Stanford in $7 billion Ponzi scheme, March 6 (Retrievable online at http://www.msnbc.msn.com/id/46642425/ns/business-us_business/)
Visit msnbc.com for breaking news, world news, and news about the economy
A Ponzi Scheme in Ohio
February 27, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
In September, a prominent member of the Amish community in Sugarcreek, Ohio was arrested and accused by federal prosecutors of running a Ponzi scheme that betrayed his neighbors’ trust and wiped out more than $16 million of their savings. The elderly defendant, Monroe L. Beachy, had been a respected financial figure in his community for decades. Interestingly, unlike Bernie Madoff, the investors went to court and urged that it was more important to forgive him than recover their money. In fact, Amish religious leaders petitioned the bankruptcy court to let the church take on the debt and handle the ponzi scheme, rather than the courts. The bankruptcy judge ruled that “delegating insolvency proceedings to a religious body” would be unconstitutional. More than a year after Beachy went bankrupt, he has been indicted on mail fraud charges arising from a “scheme to defraud” that the Feds say dates back to 1990. If convicted, he faces a possible jail term of up to 20 years.
Questions:
1. What is a Ponzi scheme?
2. The campaign to have the Beachy bankruptcy case dismissed was based on what legal Act or rights? Do you agree or disagree with the bankruptcy judge? Discuss.
3. Explain how, if Beachy had been insolvent since as early as 1998, that this fraud was able to last until 2010?
Sources:
Henriques, D. B. (2012). Broken Trust in God’s Country. The New York Times, Feb. 25. (Retrievable online at http://www.nytimes.com/2012/02/26/business/in-amish-country-accusations-of-a-ponzi-scheme.html?_r=1)
NYTimes Video. (2012). Ponzi Scheme in Ohio (Retrievable online at http://video.nytimes.com/video/playlist/business/1194811622255/index.html)
Traveling Electronically Naked
February 16, 2012 by LuAnn Bean
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, Uncategorized, Video Updates
When Kenneth G. Lieberthal travels to China, he leaves his cellphone and laptop at home. As an expert at the Brookings Institute, he instead brings “loaner” devices, which he erases before he leaves the United States and then wipes clean the minute he returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of his sight and, in meetings, not only turns off his phone but also removes the battery, for fear his microphone could be turned on remotely. He connects to the Internet only through an encrypted, password-protected channel, and copies and pastes his password from a USB thumb drive. While all of this sounds like a spy thriller, the threat to data security is very real!
Questions:
1. Why does Mr. Lieberthal cut and paste in his passwords from a thumb drive?
2. What was the most interesting point you found in the article that relates to controls for corporations with employees who travel abroad?
3. The article mentions that Federal lawmakers are considering bills aimed at thwarting cybertheft of trade secrets. Discuss whether you think that this legislation could ever deter problems arising from business dealings abroad.
Source:
Perlroth, N. (2012). Traveling Light in a Time of Digital Thievery, Feb. 10 (Retrievable online at http://www.nytimes.com/2012/02/11/technology/electronic-security-a-worry-in-an-age-of-digital-espionage.html?hpw)
YouTube.com (2012). Laptop Anti-Theft: Travel Identity Theft (Retrievable online at http://youtu.be/5d_O-36r9X0)
Audit Irregularities
February 16, 2012 by LuAnn Bean
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, Uncategorized
According to a report released on Feb. 15 in San Francisco county, about 400 recent foreclosures were determined to involve either legal violations or suspicious documentation. This recent report suggests how pervasive foreclosure irregularities may be across the nation.
Questions:
1. What is the acronym for the mortgage database that was started in 1995 to track information for lenders?
2. What types of legal violations did the report indicate?
3. Where did the greatest number of improprieties occur? What internal controls could have prevented this?
Source:
Morgenson, G. (2012). Audit Uncovers Extensive Flaws in Foreclosures. The New York Times, Feb. 15 (Retrievable online at http://www.nytimes.com/2012/02/16/business/california-audit-finds-broad-irregularities-in-foreclosures.html?_r=2&hp)
