Will your digital brain let you slow down?

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, International Accounting, Managerial Accounting.

What are the consequences of reading with the interactivity of the Internet? Researchers warn that people seem to be developing digital brains with new circuits for skimming through the torrent of information online and this is actually competing with our traditional deep reading circuitry.

Questions:
1. How do you think that this could impact auditors performing either an internal OR external audit? Discuss.
2. Explain what the author means by an “eye byte culture.”
3. Which of these do you think is more important for the professional accountant – linear or nonlinear reading? Discuss.

Source:
Rosenwald, M.S. (2014). Serious reading takes a hit from online scanning and skimming, researchers say. The Washington Post, April 6 (Retrievable online at http://www.washingtonpost.com/local/serious-reading-takes-a-hit-from-online-scanning-and-skimming-researchers-say/2014/04/06/088028d2-b5d2-11e3-b899-20667de76985_story.html?hpid=z4)

digital brain 2

Private Student Loan Changes

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, IFRS, Intermediate Accounting, Managerial Accounting, Video Updates.

With over 90 percent of private loans being co-signed, the Consumer Financial Protection Bureau (CFPB) is urging private lenders to ease automatic default rules on student loans. Complaints have risen dramatically within the last five months concerning the trigger of a default when a co-signer of a student loan dies or declares bankruptcy, even if the loan was being paid on time. “Auto defaults” force student borrowers to either immediately repay the full loan balance or the result is to issue a bad credit alert to agencies, which then hurts the student’s chances of getting a job, renting an apartment or buying a car.

Questions:
1. Compare the private student loans with federal student loans. What are some of the differences?
2. What alternatives to auto defaults is the CFPB asking the private lenders to consider?
3. What percentage are private student loans of the total of all outstanding student loan debt?
4. The majority of student loan complaints about private lenders have been filed with the CFPB about which companies?

Reference:
Douglas, D. (2014). U.S. Agency Urges Private Lenders to Ease Automatic Default Rules on Student Loans. The Washington Post, April 22 (Retrievable online at http://www.washingtonpost.com/business/economy/us-agency-urges-private-lenders-to-ease-automatic-default-rules-on-student-loans/2014/04/21/d06adeee-c97f-11e3-95f7-7ecdde72d2ea_story.html?hpid=z1)

Antitrust Hiring Suit Settlement by Technology Companies

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, Auditing, Cost Accounting, Financial Accounting, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting.

Approximately 64,000 engineers won a victory over their technology companies, but did not win much money. At issue, a class action suit claimed, was an agreement by the four technology giants – Google, Intel, Adobe and Apple – not to poach each others’ employees. The engineers argued that this private old boy’s network agreement caused their mobility and income to suffer.

Questions:
1. If the companies had not settled, what amount of money did they stand to lose?
2. What journal entry should be recorded for the settlement, assuming that each company paid an equal amount?
3. Explain why the companies settled if they were so confident of winning against the engineers. Include the potential risk issues in your explanation.

Reference:
Streitfeld, D. (2014) Tech Giants Settle Antitrust Hiring Suit. The New York Times, April 24 (Retrievable online at http://www.nytimes.com/2014/04/25/technology/settlement-silicon-valley-antitrust-case.html?hp&_r=0)

Valley-master675

The Fine Print of Reverse Mortgages

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

Children of elderly borrowers are now learning how their parents’ reverse mortgages are threatening their own inheritances.

Questions:
1. Under federal rules for reverse mortgages, what options are survivors suppose to be offered when their parents die?
2. All reverse mortgages require the borrower to pay into a federal insurance fund each month. What is this insurance suppose to do?
3. What is the estimated amount of reverse mortgages that are underwater?
4. Use the example of Robert Campbell, assuming that his mother originally received $150,000 in 2008.
(a) What entries would the lender have made over the period from 2008 to 2012?
(b) What entry would the lender have made, if they had let Mr. Campbell know about the
95% rule?
(c) Explain what type of entries they will make if they foreclose on the house of
Mr. Campbell’s mother in 2014.

Proxy fight
Source:
Silver-Greenberg, J. (2014). Pitfalls of Reverse Mortgages May Pass to Borrower’s Heirs. The New York Times, March 26 (Retrievable online at http://dealbook.nytimes.com/2014/03/26/pitfalls-of-reverse-mortgages-may-pass-to-borrowers-heirs/?_php=true&_type=blogs&_php=true&_type=blogs&hp&_r=1)

Here’s a Warning for Dog Lovers!

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Intermediate Accounting, Managerial Accounting, Video Updates.

Over approximately the last seven years (or 2,643 days), at least 600 dogs have died and thousands of others have been sickened by jerky treats. However, while the FDA has warned against this apparent link, the culprit has remained largely a mystery.

Questions:
1. Have the illnesses only affected dogs? Why is the FDA limited in its use of regulatory action?
2. What percentage increase of pet food has been imported from China over the period from 2003 to 2011?
3. Nestle Purina and Del Monte voluntarily pulled popular chicken jerky treats off the shelves in 2012. How should these companies account for these products and their revamping and overhaul of the supply chain for new products?

Source:
Dennis, B. (2014). Mystery of pet deaths related to jerky treats made in China continues to stump FDA. The Washington Post, March 28 (Retrievable online at http://www.washingtonpost.com/national/health-science/mystery-of-pet-deaths-related-to-jerky-treats-made-in-china-continues-to-stump-fda/2014/03/28/c860002a-b39b-11e3-8cb6-284052554d74_story.html?hpid=z3)

NBC video.(2013). Tainted dog treats, Oct. 23.

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When will paper records be a thing of the past at Iron Mountain?

Posted by & filed under Accounting Information Systems, All Articles, Cost Accounting, Managerial Accounting, Video Updates.

There are 600 employees of the federal government’s Office of Personnel Management processing retirement papers of the government’s own workers deep down in a limestone mine in Boyer, PA. No, this is not a joke or prank. The operative word here is “paper.” The old mine’s tunnels have room for more than 28,000 file cabinets of paper records.

Questions:
1. When did this IRON Mountain storage begin? According to the article, the processing task takes so long because of Congress and its complex retirement rules. What type of information is required?
2. Since 1977, has the government processing become more efficient and less costly? Explain how a combination of accounting information systems and managerial accounting best practices might help in a redesign.
3. According to Farenthold, the nightmare cases are the “reemployed annuitants.” What are these?

Source:
Farenthold, D.A. (2014). Sinkhole of Bureaucracy. The Washington Post, March 22 (Retrievable online at http://www.washingtonpost.com/sf/national/2014/03/22/sinkhole-of-bureaucracy/?hpid=z8)

Oh, to get a hole-in-one!

Posted by & filed under Accounting Principles, Advanced Accounting, Auditing, Cost Accounting, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Video Updates.

Matt Ramsey’s joy of winning the $10,000 prize for sinking a hole in one was not dashed by his own skills, but the scamming of Kevin Kolenda. Like other hole-in-one winners around the country, Matt learned that he was the victim of a scam whereby Kolenda sold insurance without a license in several states to people seeking indemnity for hole-in-one and putting-contest prizes, but then would not pay when a winning shot occurred.

Questions:
1. What was the name of Kolenda’s company?
2. What was the rare incident when Kolenda insured something other than golf?
3. Are Kolenda’s crimes victimless?
4. How has he been able to run under the radar for so long? Where has he faced prosecution?

Source:
Dohrmann, G. (2014). Default! The man who scammed golf prizewinners across the country. Sports Illustrated, Feb. 28 (Retrievable online at http://sportsillustrated.cnn.com/more/news/20140228/golf-insurance-fraud-kevin-kolenda/)

Dirty Dozen Tax Scams for 2014

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

In an effort to remind taxpayers to use caution during tax season and protect themselves against a wide range of schemes, the IRS compiled a variety of common scams that taxpayers can encounter at any point during the year, but which are expected to increase during peak filing season this Spring.

Questions:
1. Who criminally prosecutes such scams?
2. What are the characteristics of telephone scams, where callers claim to be from the IRS?
3. At the beginning of 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP). What is this? Briefly describe its role in collecting taxes.

Source:
IRS Staff (2014). IRS Releases the “Dirty Dozen” Tax Scams for 2014; Identity Theft, Phone Scams Lead List. Feb. 19, 2014 (Retrievable online at http://www.irs.gov/uac/Newsroom/IRS-Releases-the-%E2%80%9CDirty-Dozen%E2%80%9D-Tax-Scams-for-2014;-Identity-Theft,-Phone-Scams-Lead-List)
taxes_20120223113317_320_240

Is it wise to taunt the IRS and the Tampa Police Department on Facebook?

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

As accounting firms frantically work during this season to prepare 2013 tax returns, this story takes a look back at the story of the “Queen of Tax Fraud.” Rashida Wilson, a 27-year-old Tampa woman, who once taunted police and bragged about her ill-gotten millions on a social media website, won’t be a free woman until she’s 48 years old.

Questions:
1. What did Rashida spend her stolen money on?
2. What was the name of the two-year tax fraud investigation that resulted in the arrest of 13 people, including Rashida Wilson, for charges including identity theft, scheming to defraud and fraudulent use of credit cards? Where did Rashida boast of her scam?
3. Who are Marterrence “Quat” Holloway and Maurice Larry and what connection did they have to Rashida Wilson? Explain their training parties.

Sources:
Ryan, P. (2013). Two tax fraud sentences in two days earns Tampa man 14 years. The Tampa Bay Times, Sep. 24 (Retrievable online at http://www.tampabay.com/news/courts/criminal/with-two-tax-fraud-sentences-in-two-days-tampa-man-gets-14-years/2143713)
Jerreat, J. (2013). Woman who boasted she was the ‘Queen of IRS tax fraud’ on Facebook gets 21 years in prison after stealing $20 million. The Daily Mail – U.K., July 17 (Retrievable online at http://www.dailymail.co.uk/news/article-2366931/Floridas-First-Lady-tax-refund-fraud-gets-21-years-prison-stealing-20-million.html)

Can you beat Nate Silver?

Posted by & 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, Video Updates.

ESPN’s Nate Silver went on Sportscenter this morning and revealed his favorites for the Final Four.
The prediction:
• Louisville (#4 seed, Midwest region)
• Florida (#1 seed, South region)
• Arizona (#1 seed, West region)
• Michigan State (#4 seed, East region)
These are the favorites in each region according to Silver’s statistical model.
So, will he win Warren Buffett’s Final Four Perfect Bracket billion dollar challenge or will you?

Questions:
1. Why are Warren Buffett and QuickLoans so sure that they will not have a winner?
2. Even if no one wins, what will the people with the 20 most accurate brackets receive?
3. How many entries do they expect?
4. Does it help to know something about basketball? Explain.

Sources:
Manfred, T. (2014). Nate Silver’s Final Four Prediction Is Out, And He Has Two Big Upsets. BusinessInsider, March 17 (Retrievable online at http://www.businessinsider.com/nate-silver-final-four-2014-3)
Boren, C. (2014). Why you won’t win a billion dollars with Warren Buffett’s bracket challenge. The Washington Post, March 17 (Retrievable online at http://www.washingtonpost.com/blogs/early-lead/wp/2014/03/16/why-you-wont-win-a-billion-dollars-with-warren-buffetts-bracket-challenge/)


Nate Bracket