How Low Can You Go?

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Barbara Barkley lost her house and her savings to a group of California scam artists who stole $11 million from thousands of struggling homeowners looking for help with their mortgages.

Questions:
1. Who was the ringleader of the scam and what sentence does he face?
2. How did the scam work?
3. Why wasn’t there anything they could do after being scammed?
4. What type of due diligence should the homeowners have undertaken on the front end, before being defrauded?

Source:
Weiner, R. (2017). ‘Honey, you’ve been scammed,’ she was told. She lost her home of 30 years. The Washington Post, July 29 (Retrievable online at https://www.washingtonpost.com/local/public-safety/honey-youve-been-scammed-she-was-told-she-lost-her-home-of-30-years/2017/07/26/36afedda-7070-11e7-9eac-d56bd5568db8_story.html?hpid=hp_hp-more-top-stories-2_no-name%3Ahomepage%2Fstory&utm_term=.82eb534134b6)

The Cost of Drugs: Generic or Maybe Not….

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The standard advice for consumers is: if you are prescribed a medicine, always ask if there is a cheaper generic.

Questions:
1. According to the article, why are consumers told the opposite on some drugs – take name brand drugs and pay a higher co-pay?
2. What does Dr. Diller mean by “It’s Alice-in-Wonderland time in the drug world”?
3. What is the role of the Shire Company in this story?

Source:
Ornstein, C. and K. Thomas. (2017). Take the Generic, Patients Are Told. Until They Are Not. The New York Times, Aug. 6 (Retrievable online at https://www.nytimes.com/2017/08/06/health/prescription-drugs-brand-name-generic.html)

But wait…..there’s more………

Posted by & filed under Accounting Information Systems, Accounting Principles, Advanced Accounting, All Articles, Auditing, Cost Accounting, Ethical Dilemma, Financial Accounting, Fraud Accounting, Intermediate Accounting, Managerial Accounting, Video Updates.

Already struggling to rebuild its reputation after disclosing the creation of fraudulent bank accounts, the New York Times indicates that Wells Fargo may soon release information about even more fraudulent account creation.

Questions:
1. Based on the new investigation, how many accounts were found and over what period?
2. What is the new regulatory issue looming for Wells Fargo?
3. How have these issues affected Well Fargo’s stock price?

Source:
Cowley, S. (2017). Wells Fargo May Have Found More Fake Accounts Created by Employees. The New York Times, Aug. 4 (Retrievable online at https://www.nytimes.com/2017/08/04/business/dealbook/wells-fargo-fraud-accounts.html)

Gosh, D.C., maybe it really IS a crisis!

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When you look at middle-class manufacturing jobs. many do not even require a high school diploma but pay $15 to $25 an hour and offer full benefits. So why aren’t they being filled? As Nelson Schwartz indicates in this article, the problem is that too many applicants — nearly half, in some cases — fail a drug test.
Questions:
1. What are policy makers doing to address the underlying problem of underfilled jobs?
2. What does a federal study estimate that prescription opioid abuse cost the economy in 2013?
3. Besides unfilled jobs, what are some of the direct and indirect costs of the opioid epidemic to companies?

Source:
Schwartz, N. (2017). Economy Needs Workers, but Drug Tests Take a Toll. The New York Times, July 24 (Retrievable online at https://www.nytimes.com/2017/07/24/business/economy/drug-test-labor-hiring.html)

ER Bill Surprise!

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New data suggests that EmCare, now one of the nation’s largest physician-staffing companies for emergency rooms, is showing a disturbing pattern. In the case of a small Spokane, Washington hospital, the number of patients coded as having billing for the most complex, expensive level of care quadrupled after the hospital contracted for services through EmCare.
Questions:
1. How does the contracting process allow for this ER billing surprise?
2. What were the trends in the rates of tests ordered and patients admitted from the E.R. into a hospital after EmCare took over a hospital’s billing?
3. Even if insurers simply pay higher out-of-network bills, what happens?
4. When emergency room doctors work for a company that has not made a deal with an insurer, what happens?
5. California recently passed a law setting a maximum amount that out-of-network doctors can charge patients. What other states have followed suit?
Source:
Creswell, J., R. Abelson, and M. Sanger-Katz. (2017). The Company Behind Many Surprise Emergency Room Bills. The New York Times, July 24 (Retrievable online at https://www.nytimes.com/2017/07/24/upshot/the-company-behind-many-surprise-emergency-room-bills.html)

Another Sad Wells Fargo Story

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According to the New York Times, more than 800,000 people who took out car loans from Wells Fargo were charged for auto insurance they did not need, and some of them are still paying for it, according to an internal report prepared for the bank’s executives.

Questions:
1. How many customers were forced into delinquency and wrongful vehicle repossessions due to the unnecessary auto insurance?
2. During what period were the policies sold?
3. Why did the delinquencies rise so quickly?
4. What will be the consequences for Wells Fargo?
5. What were some of the disclosure violations?

Source:
Morgenson, G. (2017). Wells Fargo Forced Unwanted Auto Insurance on Borrowers. The New York Times, July 27 (Retrievable online at https://www.nytimes.com/2017/07/27/business/wells-fargo-unwanted-auto-insurance.html)

Amazon-Nike Powerhouse

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According to Reuters, Nike’s pilot program to sell certain products on Amazon and Instagram is a precursor to it forging a deeper relationship with online retailers, and could hit sales at sporting goods retailers such as Foot Locker Inc.

Questions:
1. What are the benefits of this deal for Nike?
2. How is Nike trying to strike a balance on this deal and not hurt sporting goods retailers as much?
3. Nike still depends on the wholesale channel for what amount of revenue?

Source:
Ganesan, G. (2017). Nike-Amazon deal may hurt sporting goods retailers: analysts. Reuters.com, June 30 (Retrievable online at http://www.reuters.com/article/us-nike-amazon-com-idUSKBN19L2LO)

A new manipulation of stock

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Kamilla Bjorlin, actress appearing in movies with Al Pacino and Anthony Hopkins, as well as countless lesser roles, is now looking at possibly her biggest role in defending herself against SEC charges against a modern “pump-and-dump” scheme.
Questions:
1. According to the SEC complaint, what was Bjorlin’s firm’s role in driving up the stock of Galena Biopharma and by how much?
2. What is Bjorlin accused of doing herself?
3. What is DreamTeam and what is their connection with an SEC complaint?
4. Who are the primary victims of the false financial news sites and articles?
5. How do the fake financial news writers benefit?

Source:
Merle, R. (2017). Allegations of ‘fake news’ stretch beyond politics. The Washington Post, July 4 (Retrievable online at https://www.washingtonpost.com/business/economy/company-moved-market-with-fake-news-stories-sec-alleges/2017/07/04/419a3bd4-54f9-11e7-b38e-35fd8e0c288f_story.html)

The Dirty Little Secret about Big Pharma

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As the New York Times reports, when Big Pharma companies are under fire for skyrocketing drug prices, they would like you to believe that prices have to be so high to support research and development (R&D). But is that the truth?

Questions:
1. What did the authors of the new study find that the 18 pharmaceutical companies in the S&P 500 spent their profits on between 2006 through 2015? Discuss the breakdown.
2. Which particular companies spent more on stock buybacks than on new drug research? Give details in your answer.
3. Discuss value extraction versus long-term strategies to combat the next big medical crisis. What are the prospects for drug innovations if this trend continues?
4. Develop an analogy that explains the strategic significance of this trend.

Source:
Morgensen, G. (2017). Big Pharma Spends on Share Buybacks, but R&D? Not So Much. The New York Times, July 14 (Retrievable online at https://www.nytimes.com/2017/07/14/business/big-pharma-spends-on-share-buybacks-but-rd-not-so-much.html)

Wiped Away

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Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing.

Questions:
1. How much do the troubled loans total?
2. According to the article, what is this situation reminiscent of?
3. What is National Collegiate?
4. Who stands to win and who stands to lose in this situation?
5. What type of accounting should be undertaken in this situation?
6. Why is National Collegiate winning any of its suits?

Source:
Cowley, S. and J. Silver-Greenberg. (2017) As Paperwork Goes Missing, Private Student Loan Debts May Be Wiped Away. The New York Times, July 17 (Retrievable at https://www.nytimes.com/2017/07/17/business/dealbook/student-loan-debt-collection.html)