OOPS! A $3 Billion Accounting Error

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Behavioral and Social Issues Related to Accounting, Cost Accounting, Financial Accounting, Intermediate Accounting, International Accounting, Managerial Accounting, Uncategorized, Video Updates.

According to Time, the Pentagon overcounted the value of weapons and other equipment sent to Ukraine by roughly $3 billion.

Questions:

  1. How did the Pentagon do this?
  2. How was the mistake caught?
  3. What is the true cost of aid to Ukraine?
  4. According to the article, how has this mistake impacted support to Ukraine?

Source:

Hennigan, W. (2023) Pentagon Says Multi-Billion Dollar Accounting Mistake Means More Arms Funding for Ukraine. Time, May 18 (Retrievable online at https://time.com/6281063/pentagon-accounting-error-ukraine-arms-funding/)

Catastrophic Panic

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According to the Washington Post, small businesses are beginning to brace for a worst-case scenario of delayed payments, stalled projects and layoffs if the nation defaults on its debt.

Questions:

  1. Briefly explain the ripple effect in the economy described in the article if default happens.
  2. What would be the estimated lost jobs?
  3. What would be the loss in household wealth?
  4. Even if a deal is reached, what instabilities in the economy are already evident?

Source:

Bhattarai, A. (2023). Small businesses are beginning to panic about a government default. The Washington Post, May 21 (Retrievable online at https://www.washingtonpost.com/business/2023/05/20/debt-ceiling-small-business/)

Investing in an IRA at the last minute. Good idea?

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Financial Accounting, Income Taxes, Uncategorized.

According to the New York Times, investing in an I.R.A. just before you file your taxes is better than not investing at all, but may not make as much sense as using the money to pay your bills. 

Questions:

  1. What does the article recommend rather than follow the procrastinator strategy or lack of strategy?
  2. What is the amount of difference if you invest in January each year versus April the following year over a 10-year period?
  3. How much less is the procrastinator worth over a 30-year period even if they contribute the same amount as the person that routinely invests at the beginning of the year prior to filing taxes?
  4. In a word, what is the reason for this difference?

Source:

Sommer, J. (2023). Why Investing at the Last Moment Can Hurt Your Returns, February 25 (Retrievable online at https://www.nytimes.com/2023/02/25/business/investing-taxes-ira-401k-penalty.html)

Vice Headed for Bankruptcy

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According to the New York Times, Vice, the digital-media company that earned investments by Disney and Fox prior to a crash-landing, is preparing to file for bankruptcy, according to two people with knowledge of its operations.

Questions:

  1. How many companies have expressed an interest in buying Vice?
  2. How much was Vice worth in 2017 after a round of funding from private-equity firm TPG?
  3. Who is the senior debt holder of Vice and what does that mean?
  4. What were Vice’s beginnings?

Source:

Hirsch, L. and B. Mullin. (2023). Vice Is Said to Be Headed for Bankruptcy. The New York Times, May 1 (Retrievable online at https://www.nytimes.com/2023/05/01/business/media/vice-bankruptcy.html).

First Republic’s Problems

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According to the New York Times, the bank’s rivals appear on firmer footing this time, in contrast with the widespread panic after the failures of Silicon Valley Bank and Signature Bank in March.

Questions:

  1. Where does this failure rank in size as far as U.S. history goes?
  2. Which bank was First Republic sold to and what is your opinion why?
  3. Who lost the most money in the deal?

Source:

Cowley, S. (2023). In An Unsteady Banking Industry, First Republic’s Problems Stood Out. The New York Times, May 1 (Retrievable online at www.nytimes.com/2023/05/01/business/first-republics-regional-banks-crisis.html)

The Godfather Speaks about AI

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Cost Accounting, Ethical Dilemma, Financial Accounting, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Uncategorized.

According to the New York Times, for half a century, Geoffrey Hinton nurtured the technology at the heart of chatbots like ChatGPT. Now he worries it will cause serious harm.

Questions:

  1. What did Dr. Hinton and his grad students create in 2012?
  2. Why did Dr. Hinton quit his job at Google?
  3. What is the most interesting point that you learned from the article?
  4. Can you imagine a scenario where bad actors would cause problems with accounting reporting? Discuss.

Source:

Metz, C. (2023). ‘The Godfather of A.I.’ Leaves Google and Warns of Danger Ahead. The New York Times, May 1 (Retrievable online at https://www.nytimes.com/2023/05/01/technology/ai-google-chatbot-engineer-quits-hinton.html)

New York Eases Greenhouse Gases Accounting

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According to the Washington Post, New York Gov. Kathy Hochul (D) is backing a proposal to change the state’s method of accounting for greenhouse gas emissions, after state modeling estimated significant cost increases for buying gas and heating homes.

Questions:

  1. When did the law originally pass?
  2. The change is from a ___ year metric to a ____ year metric.
  3. Which metric do you think is best and why? Discuss.
  4. What other state is currently following the same metric as New York?
  5. What are cap-and-invest programs?
  6. According to modeling of the current law, it would cost New Yorkers ___ percent more to buy a gallon of gas and ___ percent more to heat their homes when the cap-and-invest program takes effect.

Source:

Joselow, M. and V. Montalbanos (2023). New York, citing consumer costs, may ease its greenhouse gas accounting rules. The Washington Post, April 4 (Retrievable at https://www.washingtonpost.com/politics/2023/04/04/new-york-citing-consumer-costs-may-ease-its-greenhouse-gas-accounting-rules)

NBCUniversal CEO Out

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According to the Washington Post, the NBCUniversal CEO Jeff Shell will leave the company “effective immediately” following an investigation into a complaint of inappropriate conduct.

Questions:

  1. How long has Shell been with the company?
  2. When was he named CEO?
  3. NBCUniversal is the parent company for what other entities?
  4. What did Shell say about his predecessor, which is probably true in his own case?

Source:

Kaur, A. (2023). NBCUniversal CEO departs after ‘inappropriate relationship’. The Washington Post, April 23 (Retrievable online at https://www.washingtonpost.com/business/2023/04/23/jeff-shell-ceo-nbcuniversal-leaves)

Artificial Intelligence (AI) Responses Are Responsible for the Firing of an Editor

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Recently, we have heard many things about the dangers of artificial intelligence (AI). Today, the New York Times published an article about the firing of the editor of German celebrity magazine Die Aktuelle that used the AI-generated responses of retired Formula 1 driver, Michael Schumacher.

Questions:

  1. How long had the editor been at the magazine?
  2. When did Schumacher have his skiing accident?
  3. What action was the family of Schumacher planning to take?
  4. What should the editor have done to assure that the responses, which sounded deceptively real, were in fact real?
  5. What types of AI problems do you anticipate in the professional accounting workplace, if any?

Source:

Holpuch, A. (2023) German Magazine Editor Is Fired Over Fake Michael Schumacher Interview. The New York Times, April 24 (Retrievable online at https://www.nytimes.com/2023/04/24/business/media/michael-schumacher-ai-fake-interview.html)

Bankruptcy for Bed Bath & Beyond

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Behavioral and Social Issues Related to Accounting, Cost Accounting, Ethical Dilemma, Financial Accounting, Income Taxes, Intermediate Accounting, Managerial Accounting, Uncategorized, Video Updates.

According to the New York Times, Bed Bath & Beyond (BB&B) failed to fully reckon with the rise of online shopping, leading to its bankruptcy filing.

Questions

  1. If you have a Bed Bath & Beyond gift card, what is your deadline to use it?
  2. After this deadline, what is the journal entry that BB&B accountants should make for the unused card amounts?
  3. Explain what you think the term “the Darwinism of retail” means as mentioned by Michael Lasser.
  4. When did the company actually start?
  5. What was its first name?
  6. When did it go public?
  7. What happened to the company during the 2008 crisis?

Source:

Holman, J. and M. Hirsch (2023). Bed Bath & Beyond Files for Bankruptcy. The New York Times, April 23 (Retrievable online at https://www.nytimes.com/2023/04/23/business/bed-bath-beyond-bankruptcy.html)