Gift Scandal in Virginia

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, Uncategorized.

Maureen McDonnell through the years: Virginia’s first lady has taken the field as a cheerleader for both the Redskins and husband, Gov. Robert. F. McDonnell.

There has been a growing investigation into gifts that Virginia’s governor and wife have secured from businessman, Jonnie R. Williams Sr. One of the key issues that the FBI is investigating is Governor Bob McDonnell’s ties to a company known as Star Scientific and gifts from its chief executive is Mr. Williams.

Questions:
1. Based on the article and in your opinion, which incident shows the greatest lack of independence between William’s Star Scientific and Governor McDonnell? Discuss why you picked this.
2. Why is independence important for CPAs to maintain, as well as government officials?
3. Find an article where a CPA violated independence by accepting gifts and compare it to the alleged violations of the Virginia governor. Is the perception of a lack of independence just as serious as an actual lack of independence? Why or why not?

Sources:
Vozzella, L., Fredrick Kunkle, and Rosalind S. Helderman (2013). Virginia’s first lady plays central role in gift scandal. The Washington Post, July 13 (Retrievable online at http://www.washingtonpost.com/local/va-politics/va-first-lady-plays-central-role-in-gift-scandal/2013/07/13/f1f94456-de75-11e2-948c-d644453cf169_story.html)

Vozzella, L. (2013). Del. Scott Surovell says Virginia Gov. McDonnell should resign, or be forced out. The Washington Post, July 14.

Making government contracting pay and pay and pay……..

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, Uncategorized.

According to the Washington Post, a federal judge sentenced Kerry F. Khan, the mastermind of a contracting scam of “historic proportions,” to nearly two decades behind bars. This sentence was even more than prosecutors had requested because of the “staggering” scope of the scheme.

Questions:
1. What were some of the “red flags” associated with this scheme?
2. How did Khan steal more than $30 million? In other words, what methods did he use?
3. What was Michael Alexander’s role in the scam and what was his sentence?

criminal-justice-logo-mdSource:
Marimow, Ann E. (2013). Ex- Army Corps official sentenced in contracting scheme of ‘historic proportions.’ The Washington Post, July 11 (Retrievable at http://www.washingtonpost.com/local/ex–army-corps-official-sentenced-in-contracting-scheme-of-historic-proportions/2013/07/11/7d8ba21e-ea21-11e2-a301-ea5a8116d211_story.html?hpid=z2)

Would you prefer a payroll card to direct deposit?

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.

More and more American workers are facing fees before they are able to access their wages on payday. Why? Prepaid cards have been issued by their employers to replace direct deposit or paper paychecks.

Questions:
1. Who are some of the well-known companies using these prepaid cards? Why is the New York attorney general getting involved?
2. What are the benefits to employers of using prepaid cards?
3. What company is the largest issuer of payroll cards?
4. Do you think that Ms. Gunshannon will be able to force a class-action suit and prevail against the issuing corporations? Why or why not?

Source:

Silver-Greenberg, J. and S. Clifford. (2013). Paid via Cards, Workers Feel the Sting of Fees. The New York Times, June 30 (Retrievable online at http://www.nytimes.com/2013/07/01/business/as-pay-cards-replace-paychecks-bank-fees-hurt-workers.html?hp
Silver-Greenberg, J. (2013). Payroll Cards Are Under Scrutiny by New York’s Attorney General. The New York Times, July 2 (Retrievable online at http://dealbook.nytimes.com/2013/07/02/payroll-cards-are-under-scrutiny-by-new-yorks-attorney-general/?src=dlbksb)

Youtube Video. (2013). McDonalds Franchise Sued for Paying With Payroll Cards. Newsy, June 18 (Retrievable online at http://www.youtube.com/watch?v=d0_djfs6b_w)

Would you invest in a Bitcoin Fund?

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, Uncategorized.

Bitcoin has been promoted as an alternative crypto-currency that exists outside the realms of governments and central banks. Now Cameron and Tyler Winklevoss, the twins best known for their part in the history of Facebook, filed a proposal with securities regulators that would allow any investor to trade bitcoins, just as if they were stocks.

Questions:
1. What is a bitcoin?
2. How would the fund work?
3. What are some of the risk factors associated with bitcoins and the potential for this fund?

Source:
Popper, N. and P. Lattman. (2013). Winklevoss Twins Plan First Fund for Bitcoins. The New York Times, July 1 (Retrievable online at http://dealbook.nytimes.com/2013/07/01/first-name-in-the-first-fund-for-bitcoins-winklevoss/?WT.mc_id=DB-D-I-NYT-MOD-MOD-M312B-ROS-0713-HDR&WT.mc_ev=click&WT.mc_c=219740)

Tyler, left, and Cameron Winklevoss in April, when they said they had $10 million in bitcoins.

Could you live on $8M a month?

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

Equilar Inc., the executive compensation analysis firm, found that the median 2012 pay package came in at $15.1 million — a leap of 16 percent from 2011. However, at 19 percent in 2012, that median stock market returns for these companies was only three percentage points higher than the pay raise. Lawrence J. Ellison, founder and C.E.O. of Oracle, the software company, is a familiar face on the pay charts, and is ranked No. 1 this year with executive pay of $96.2M.

Questions:

1. According to the article, what was the median cash pay as compared to the median stock and option grants for CEOs last year?
2. According to the article, where do corporate Board fail with respect to improving company performance?
3. Overall, what percent raise did Mr. Ellison receive in 2012? How did this compare to the shareholder returns on Oracle stock?

Source:

Mortgenson, G. (2013). An Unstoppable Climb in CEO Pay. The New York Times, June 29 (Retrievable online at http://www.nytimes.com/2013/06/30/business/an-unstoppable-climb-in-ceo-pay.html?src=rechp&_r=0) LAWRENCE J. ELLISON of Oracle Highest-paid C.E.O.: $96.2 million

Double-Dipping Pain

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, Uncategorized.

Many homeowners are being taken to court by their lenders long after their houses were taken in foreclosure. How? Lenders are filing new motions in old foreclosure lawsuits and hiring debt collectors to pursue leftover debt, plus court fees, attorneys’ fees and tens of thousands in interest that had been accruing for years.

Questions:
1. If a property has a $400,000 mortgage and is only worth $230,000 following the housing crisis, what amount is the underwater amount?
2. According to the article, Freddie Mac is targeting “strategic defaulters.” Explain this term.
3. According to a recent government audit, what is the recovery rate of deficiency judgments?
4. What can be a potential down side for borrowers when a bank forgives a deficiency judgment?

r-FORECLOSURE-large570Source:

Kelly, K. (2013). Lenders seek court actions against homeowners years after foreclosure. The Washington Post, June 15 (Retrievable online at http://www.washingtonpost.com/investigations/lenders-seek-court-actions-against-homeowners-years-after-foreclosure/2013/06/15/3c6a04ce-96fc-11e2-b68f-dc5c4b47e519_story.html?hpid=z2)

Deloitte Fined and Banned: Accounting Firm Botches Consulting Engagement Dealing with Bank Regulatory Problems

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, Uncategorized.

MoneyDeloitte was hired by Standard Chartered, a British bank, to independently spot suspicious money transfers routed through its New York branches. However, as the consultants, a final report submitted to state regulators was watered down, indicating misconduct by Deloitte and a lack of autonomy for Standard Chartered’s illicit transfers of billions of dollars on behalf of Iran. As part of a settlement with state officials, Deloitte was fined $10 million and banned from advising banks for one year.

Questions:
1. Why did the article claim that New York’s agreement will serve as a model for reforming financial service consulting? Discuss.
2. Explain why the article referred to some of the world’s largest accounting firms as shadow regulators of Wall Street.
3. What other types of botched reviews by these consultants have been in the news recently?

Source:
Protess, B. and J. Silver-Greenberg. (2013). In Crackdown on Bank Consultants, Deloitte is Fined and Banned. The New York Times, June 18 (Retrievable online at http://dealbook.nytimes.com/2013/06/18/in-crackdown-on-bank-consultants-deloitte-is-fined-and-banned/?hpw)

Right on the Money

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.

Back in January, when Jacob “Jack” Lew was a mere nominee for the position of Secretary of the Treasury, the New York Magazine described his signature as a “slinky that has lost its spring.” Now, as the official Treasury secretary, his signature has changed.

Questions:
1. Why were people worrying about Lew’s signature in the first place?
2. When was Jacob Lew sworn into office?
3. Who did Mr. Lew replace?
4. Research Mr. Lew’s background. What do you find interesting about him and/or his qualifications?

Sources:
Peralta, E. (2013). Treasury Secretary Jacob Lew Gets A New Signature. NPR.org, May 7 (Retrievable online at http://www.npr.org/blogs/thetwo-way/2013/05/07/182033320/treasury-secretary-jacob-lew-gets-a-new-signature)
Klein, E. (2013). The best thing about a Treasury Secretary Jack Lew. The Washington Post, January 9 (Retrievable online at http://www.washingtonpost.com/blogs/wonkblog/wp/2013/01/09/the-best-thing-about-a-treasury-secretary-jacob-lew/)
Bennett, D. (2013). Here’s Treasury Secretary Jack Lew’s New John Hancock, The Atlantic, June 18 (Retrievable online at http://www.theatlanticwire.com/business/2013/06/treasury-secretary-jack-lew-new-signature/66363/)
NBC Nightly News video. (2013). Jacob Lew’s new signature. NBC, May 7 (Retrievable online at www.nbcnews.com/video/nightly-news/51810538)

Visit NBCNews.com for breaking news, world news, and news about the economy

The Goldilocks Number

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.

Why does Wall Street like a “Goldilocks number” when it comes to job growth? Job growth in May kept up with the year’s monthly average, with 175,000 new jobs added. Meanwhile, the unemployment rate increased slightly to 7.6 percent.

Questions:

1. What is the role of the Federal Reserve regarding the risk Wall Street sees?
2. Is there another way to look at the job growth numbers? If so, what is it?
3. According to economists, how many new jobs are needed each month to absorb people who want to join the work force for the first time? Based on this, what is your take on the economy?

Source:

NYT Video. 2013. Why does Wall Street Like Slow Job Growth? (Retrievable online at http://www.nytimes.com/video/2013/06/07/business/100000002268189/why-wall-street-likes-slow-job-growth.html#100000002268189)
Crudele, J. 2013. The Perfect Mix. The New York Post (Retrievable online at http://www.nypost.com/p/news/business/the_perfect_mix_xC4RVG23aNggwn2DDwcZFO)

Read the fine print

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, Uncategorized.

It is likely that when you get your first job or when you move to a new job that you will be asked about enrolling in a long-term care insurance benefits program. According to Ms. Siegel, one of the most important reasons for people buy long-term care insurance is to avoid burdening a spouse or grown children when they can no longer care for themselves. However, navigating the claims process for long-term care insurance is very difficult and requires an understanding of deductibles, eligibility, restrictions regarding licensed caregivers, terminology related to the types of facilities covered, alternate plans of care, and how to processMEDICAID-1-articleLarge proper documentation.

Questions:
1. Do you think that the CPA could provide an eldercare service that would help streamline the process addressed in this article? Outline possible services in your answer.
2. Which of the factors mentioned in the article do you think are the most difficult to address and why?
3. Based on the article, what would be your advice to one of your clients, future clients, or your mom or dad who asks you the costs and benefits of taking out a long-term care policy? Be as specific as possible in what you would advise them to do.

Source:

Bernard, T.S. (2013) Fine Print and Red Tape in Long-Term Care Policies. The New York Times, June 7 (Retrievable online at http://www.nytimes.com/2013/06/08/your-money/fine-print-and-red-tape-in-long-term-care-policies.html?hp)