Number One Winner!

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.

A new study by the nonprofit, Integrity Florida, ranks the Sunshine State as the nation’s most corrupt state. Since 1976, 1,762 of Florida’s public officials have been convicted of public corruption, with an average of 71 convictions per year over the period from 2000 to 2010. The study gives Florida a C minus grade on ethics enforcement, citing Forbes’ “Most Miserable Cities” that placed three of the state’s cities on the list due to corruption.

Questions:

1. What states followed Florida as being most corrupt? Suggest why you think the report found this order of states. Could their methodology be flawed? Discuss.
2. Read the nonprofit’s report. What major recommendations does the report state which would advance government ethics in Florida and the public’s overall confidence in state and local government if adopted by the Florida Legislature?
3. How do these differ from the recommendations they suggest that the Florida Legislature could adopt to improve the current state of the ethics laws without making major changes to the system?
4. Which measures do you think are the most important and why?

Staff. (2012). Florida Is The Most Corrupt State In The Country, According To Integrity Florida Study, Huffington Post, June 7 (Retrievable online at http://www.huffingtonpost.com/2012/06/07/florida-most-corrupt-in-country_n_1577571.html?ref=miami)

Security for the Super Rich

Posted by & filed under Accounting Principles, Advanced Accounting, All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, Intermediate Accounting, Video Updates.

Dan Clark has been Warren Buffett’s bodyguard for almost two decades. Since Clark has cultivated his security skills, he has started a security company that now employs 150 guards and he has safeguarded others like Sarah Palin, George Clooney, Barack Obama, and the Iraqi Judge who oversaw the trial of Saddam Hussein, when they visited Nebraska.

Questions:
1. What was one of the most notable threats to Warren Buffett?
2. How much did Warren Buffett pay for security in 2010? How does that compare to Walt Disney security costs for its president and CEO?
3. How do you think the security costs for Warren Buffett are accounted for (Journal entries)?
4. Many firms that have significant business internationally invest in kidnapping insurance for their top executives. Research “kidnapping insurance” on the Internet.
What did you find that was most interesting or surprising to you?

Source:

MSNBC.com Video. Security for the Super Rich.

Wachtel, K. (2011). Meet Dan Clark: Warren Buffet’s Personal Body Guard. Business Insider, April 25 (Retrievable online at http://articles.businessinsider.com/2011-04-25/wall_street/29959526_1_susie-buffett-security-fake-gun).

Gonzalez, C. (2011). He Follow’s Buffett’s Every Move. Omaha World Herald, April 24 (Retrievable online at http://www.omaha.com/article/20110424/NEWS01/704249919).

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

Would you like to know what everyone in your company makes?

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

Boulder-based Namasté Solar, a Solar panel installation company, may be on the cutting edge of business practices by letting employees know what their co-workers are being paid. In addition to bi-annual retreats and a voting system for employees that counts the opinion of nearly everyone in the company, each employee receives equal bonuses.

Questions:

1. According to the article, no worker’s salary is allowed to be more than ________ times anyone else’s.

2. According to the Economist, what percentage of people think that pay should be made public? What are some of the theories on why this is so low?

3. What are your views on salary transparency? Discuss.

4. What journal entry does an employer make to record salary expenses for the company?

Source:

Bradford, H. (2012). Namasté Solar Allows Employees To Know How Much Their Coworkers Make, Huffington Post, June 9 (Retrievable at http://www.huffingtonpost.com/2012/06/08/namaste-solar-pay-policy_n_1582153.html?ref=business)

Another Loan Modification Nightmare!

Posted by & filed under All Articles, Financial Accounting, Financial Reporting and Analysis, Financial Statement Analysis, IFRS, Intermediate Accounting, Video Updates.

When will these stories end? Lily Washington started a loan modification process with Bank of America (BoA). However, shortly thereafter her son was injured in Iraq and she had to travel to a military hospital in Germany to be with him. Although she had notified the bank and received a written response that they would wait for her return, Fannie Mae foreclosed on her home. When she returned, her home had been emptied and a “for sale” sign had been planted in the front yard. It is not clear whether BoA or Fannie disposed of all of her belongings, including Lily’s son’s “purple heart!”

Questions:

1. What is a loan modification? Explain various scenarios.

2. Develop a loan modification example and explain the journal entries that the bank would make for your case.

3. What is Mrs. Washington doing about the situation? How will this remedy replace the purple heart and other keepsakes?

4. What is BoA’s position? What are the issues from an accounting viewpoint for BoA? Explain what you think the outcome might be. Based on your outcome, explain how it would be accounted for on BoA’s books.

5. Is this the first time that BoA has been in the news regarding foreclosures? Explain.

Sources:

Huffington Post Staff. (2012).Lilly Washington Says BofA Foreclosed On Her Home, Took Her Son’s Purple Heart, While She Was Visting Him In A Military Hospital, June 5 (Retrievable at http://www.huffingtonpost.com/2012/06/05/lilly-washington-bofa-foreclosure_n_1570860.html)

HP Video. (2012). Woman Claims Bank Foreclosed on Home without Notice. Huffington Post, June 5.


Caught in a Lie

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

In May 2006, well-known Denver DJ, Steven B. Williams’ body was found dead off the in the waters off Santa Catalina Island with one bullet in his head. The case was cold until a salesman and ex-cop, Joe Parsetich, at a Great Falls, Montana, car dealership decided to check out a story from co-worker, Harvey Morrow, who said he had moved inland to Montana after his wife had died in a tragic boating accident, and he wanted to get as far from the ocean as he could.

Question:

1. What career did Harvey Morrow have before selling cars in Montana?
2. What was the motive for the killing?
3. Discuss this case in terms of the elements of the fraud triangle, given the limited information in the article.
4. Do you think that any controls should have been in place to prevent the original fraud? If so, what?
5. What do you notice about the video that is important to note in any type of interview regarding a fraud or crime?
6. What skill did Joe Parsetich use, that are also an important part of the skill-set for a forensic accountant or fraud examiner?

Sources:

Roberts, M. (2011). Harvey Morrow convicted of murdering legendary Denver DJ Steven B. Williams, Nov. 10 (Retrievable online at http://blogs.westword.com/latestword/2011/11/harvey_morrow_steven_b_williams_murder_convicted.php)

MSNBC Video. (2011).Detectives Question Harvey Morrow: Who Killed the Radio Star?. MSNBC.com, June 3 (Retrievable online at http://video.msnbc.msn.com/dateline/47649502#47649485

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

Helium Crisis

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

There’s a severe helium shortage brewing in the U.S., thanks to a 1996 law set by Congress to force the government to sell off its helium reserves at bargain-bin prices. As this video explains, the nonrenewable gas is much more important for products other than balloons!

1. What products use helium?
2. What are the prospects for increasing helium supplies? Explain.
3. Why was the Congressional sell-off of the Federal Helium Reserve by the end of 2014 a mistake? Explain.
4. Assume a vendor sold a 200 bundles of balloons for $40 per bundle before the shortage and the gross profit margin was 50% Now, assume that the same bundle sells for $168 with a gross profit margin of 25%. How many bundles would the vendor need to sell to maintain the same amount of gross profit?

Source:

NBC News video. Helium Shortage Deflates Balloon Business, NBC.com, May 30 (Retrievable online at http://video.msnbc.msn.com/your-business/25963694/#47616775)

Plumer, B. (2012). Senators see ballooning national crisis: helium shortage. The Seattle Times, June 4 (Retrievable online at http://seattletimes.nwsource.com/html/nationworld/2018209561_helium15.html)

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

Patagonia: A Vision for Sustainability

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

Patagonia started out as a small company that made tools for climbers. The company’s worldwide business still embraces Alpinism remains at its heart, making clothes for climbing – as well as for skiing, snowboarding, surfing, fly fishing, paddling and trail running. True to its love for nature, the company’s founder, Yvon Chouinard, launched the company in 1973 with a corporate vision that embraces corporate responsibility and environmental issues.

Questions:

1. Go to Patagonia’s website and briefly explain the “Footprint Chronicles.”
2. What is the company’s common thread initiative?
3. Go to http://www.thecleanestline.com/. This is the Weblog for the employees, friends and customers of the outdoor clothing company, Patagonia. Choose your favorite posting and tell how it might impact the profits for Patagonia or how it would be accounted for in the company’s financial statements.

Sources:

1. Patagonia website at www.patagonia.com.
2. MSNBC video. Learning from the Pros – Patagonia (Retrievable online at http://video.msnbc.msn.com/your-business/25963694/)

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

The Price of Transparency in Hospitals

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.

One of the biggest problems today is that consumers have no way of figuring out how much a particular health care service costs. Unfortunately, a recent Arizona bill to encourage hospitals and doctors to become more transparent about the prices they charge for services was just killed by the state legislature. The bill would have required health care facilities to provide publicly available direct pay prices for at least the fifty most used diagnosis-related group codes, as well as at least fifty of the most used outpatient service codes for the facility. Similarly, doctors would have been required to publish the direct-pay prices for their 25 most common services.

Questions:

1. According to the article, why did this reform fail in Arizona?
2. Discuss whether you think that this kind of transparency would reduce health care costs. Do you agree or disagree with the author that Arizona’s legislation would have helped the rest of America? Why or why not?
3. Analyze the case of Jo Ann Synder mentioned in the article. What percentage could Jo Ann have saved if she had paid for the scan herself? Assume that Blue Shield pays the negotiated rate mentioned in the article for 100 scans per week. What percentage of the company’s costs could be saved per week if the cash price were paid instead? What would be the annual amount saved? Who would these saved costs benefit? Who would not benefit if this system is changed?

Source:

Roy, A. (2012). Why do Hospitals Charge $4,423 for $250 CT Scans? Blame Arizona Republicans, Forbes, May 26 (Retrievable online at http://www.forbes.com/sites/aroy/2012/05/27/why-do-hospitals-charge-4423-for-250-ct-scans-blame-arizona-republicans/)

Tsunami of fraud

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.

When Flora Goldberg tried to file her tax return last year, she learned that someone had beaten her to it.

Watch out Florida! Coming to a town near you! Identity theft has violent criminals trading guns for laptops. Ledgers are stolen for social security numbers in order to file phony tax returns. Most times, refunds are returned on convenient but hard-to-trace prepaid debit cards. In addition, postal workers have been harassed, robbed and, in one case, murdered as they have made their rounds with mail trucks full of debit cards and master keys to mailboxes. From 2008 to 2011, the number of returns filed by identity thieves and stopped by the I.R.S. increased significantly. Last year, it was at least 1.3 million. With only 30 percent of the filings reviewed so far, the number is already at 2.6 million.

Questions:

1. Based on the figures quoted in the article, how many fraudulent identity theft filings are anticipated for 2012?
2. What is the increase in identity theft filings when comparing the amount in 2011 to the projected amount for 2012?
3. Based on the article, can you suggest any controls that would prevent this explosion in identity theft with respect to the moneys of the U.S. Treasury?

Source:

Alvarez, L. (2012). With Personal Data in Hand, Thieves File Early and Often. The New York Times, May 26 (Retrievable online at http://www.nytimes.com/2012/05/27/us/id-thieves-loot-tax-checks-filing-early-and-often.html?_r=1&hp)

Double Jeopardy Foreclosures – BEWARE!

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, Video Updates.

Foreclosure has been a terrible tragedy for many Americans during this economic downturn. The only ray of light for some is that once a foreclosure is settled, there is some relief from no longer being in debt. However, Heritage Pacific Financial of Plano Texas company has been one company that continues to victimize people with foreclosed homes by claiming that they fraudulently acquired second mortgages that must be paid back. By law, homeowners cannot be pursued for two debts on the same property after its been foreclosed.

Questions:

1. What are companies like Heritage Pacific banking on when they sue people like Mr. Abdelfattah?
2. Why are companies like Heritage Pacific on the wrong side of the law in these dealings?
3. The FTC is cracking down on debt collector abuse. Review the Debt Collections slide show at the bottom of the Huffington Post article. Which one of these do you think is the most interesting and why?

Source:

Bradford, H. (2012). Ahmed Abdelfattah, California Foreclosure Victim, Sued By Heritage Pacific Financial For Second Mortgage Debt, Huffington Post, May 29 (Retrievable online at http://www.huffingtonpost.com/2012/05/29/ahmed-abdelfattah-heritage-pacific-financial_n_1553483.html#s=1010185)