I’ll have a Double Irish, Dutch Sandwich to go please

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

In a remarkable tax maneuver, Google moved 10.7 billion euros (or $12 billion) through the Netherlands to Bermuda in 2014. As a result of this structuring, Google will earn most of its foreign income tax-free.

Questions:
1. What is this tax strategy called and why? Why Bermuda?
2. Why has corporate tax avoidance risen to the top of political agendas in Europe?
3. How many employees does Google Netherlands Holdings NV have?
4. Discuss the difference between corporate tax fraud and corporate tax avoidance. What is your personal opinion of Google’s maneuver and what are some of the ways that these structurings could be minimized or eliminated?

Source:
Sterling, T. and T. Bergin. (2016). Google accounts show 11 billion euros moved via low tax ‘Dutch sandwich’ in 2014. Reuters.com, Feb. 19 (Retrievable online at http://www.reuters.com/article/us-google-tax-idUSKCN0VS1GP)
money_ball

A Sign of the Times: Monopoly Changes

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In its newest edition of Monopoly called “Ultimate Banking,” Hasbro has decided to drop the dollar bills and replace them with credit cards.

Questions:
1.When did Parker Brothers first start selling the Monopoly game?
2.How will players keep track of their property and money with this new version of the game?
3. What are some of the many editions of Monopoly released over the years?
4. Discuss whether you think this is a good change or not. Include at least 3 arguments.

Source:
Bever, L. (2016). Monopoly is changing again–and some parents are not going to like it. The Washington Post, Feb. 19 (Retrievable online at https://www.washingtonpost.com/news/wonk/wp/2016/02/19/monopoly-is-changing-again-and-some-parents-are-not-going-to-like-it)

End Arbitration?

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

As this blog has noted, arbitration clauses have proliferated in all types of contracts over the last few years for transactions related to cellphone service, credit cards, student loans, etc. Now a pivotal case regarding a nursing home death is putting arbitration to the test for its lack of transparency and applicability to elder abuse and negligence.

Questions
1. What is the question of objectivity that is being raised in the case? Give a similar analogy using an example related to the accounting profession and discuss.
2. What is power of attorney and how does it play into this case?
3. What is the difference between a health care proxy and a power of attorney?
4. What was the most interesting thing that you learned in this article?

Source:
Corkery, M. and J. Silver-Greenberg. (2016). Pivotal Nursing Home Suit Raises a Simple Question: Who Signed the Contract? The New York Times, Feb. 21 (Retrievable online at http://www.nytimes.com/2016/02/22/business/dealbook/pivotal-nursing-home-suit-raises-a-simple-question-who-signed-the-contract.html)

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Lock Down that Debit Card

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Have you ever lost or misplaced your debit card? Now some banks are offering a simple app for your cellphone that will allow you to protect bank accounts quickly while you figures out whether you lost or misplaced your card.

Questions:
1. How does Bank of America’s version of the debit card lock work?
2. What are some of the other banks that have this technology?
3. How do these affect joint accounts?
4. Are the locks available on credit cards?
5. What is/are the biggest advantage(s) to banks?

Source:
Carrns, A. (2016). A Way to Lock Lost Debit Cards, From a Big Bank. The New York Times, Feb. 3 (Retrievable online at http://www.nytimes.com/2016/02/04/your-money/a-way-to-lock-lost-debit-cards-from-a-big-bank.html)
bank of america

Walmart Adds to the Woes of Small Town America

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WalMart recently made the decision to close over a hundred stores at once in rural towns across America. In many cases, competitors were forced out of business by the WalMart stores, so now these rural towns are left without grocery stores or shopping options that are many miles away.

Questions:
1. According to the article, how many stores were closed at once?
2. Explain which pilot program made up the largest percentage of the stores closed.
3. Although WalMart said that it was the financial component that was the primary closure factor, what geographic statistic was mentioned in the article?
4. What economic ripple effects will these closures start?

Source:
DePillis, L. (2016). What happens to a tiny town when Walmart disappears? The Washington Post, Feb. 5 (Retrievable online at
https://www.washingtonpost.com/news/wonk/wp/2016/02/05/what-happens-to-a-tiny-town-when-walmart-disappears/)

walmart

Chinese Exodus of Capital

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

With the Chinese economy tanking, more and more wealthy families are trying to move large sums of money out of the country. As Mr. Bradsher notes in this article, “some methods are perfectly legal, like investing in real estate elsewhere, buying businesses overseas and paying off debts owed in dollars. Others, like Smurfing, are more dubious, and in certain cases, outright illegal.”

Questions:
1. What is the Chinese annual legal cash control limit?
2. How are people trying to get around that limit?
3. What is smurfing?
4. How will the outflow of cash affect China’s economy?
5. What did China do to the renminbi that set off the crisis?
6. Explain the latest move by people to buy life insurance in renminbi.

Source:
Bradsher, K. (2016) Chinese Start to Lose Confidence in Their Currency. The New York Times, Feb. 13 (Retrievable online at http://www.nytimes.com/2016/02/14/business/dealbook/chinese-start-to-lose-confidence-in-their-currency.html)

Beware of the Imposter!

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

Jeremy Wilson spent 25 years fabricating new aliases, leaving behind a thicket of confusing and falsified records. Along the way, he had more than 27 aliases in five states. Now he is at Rikers Island, awaiting trial.

Questions:
1. How did Mr. Wilson use these various identities to commit fraud?
2. What does the article mean when it talks about his approach to fraud as old-fashioned?
3. What was Wilson’s first con job?
4. What red flags of fraud were mentioned regarding Mr. Wilson?
5. What do you think was his most outrageous fraud?
6. How did the frauds benefit him, if at all? Discuss in terms of the fraud triangle.

Source:
McKinley, Jr, J. and R. Rojas. (2016). The Lives and Lies of a Professional Impostor. The New York Times, Feb. 4 (Retrievable online at http://www.nytimes.com/2016/02/07/nyregion/jeremy-wilson-a-compulsive-con-man.html) 07CONMAN-COMBO-master675-v2

Shkreli Smurks at Congress and Later Calls Them “Imbeciles”

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Martin Shkreli, the former chief executive of Turing Pharmaceuticals, repeatedly exercised his Fifth Amendment right to avoid self-incrimination, infuriating members of the House Committee on Oversight and Government Reform. Mr. Shkreli is facing federal securities fraud charges.

Questions:
1. What is the scandal that Mr. Shkreli’s company is apart of?
2. What is the connection of Valeant Pharmaceuticals International with this hearing?
3. If Turing had acquired the rights to Daraprim, a 62-year-old drug for a parasitic infection, and raised the price fiftyfold, to $750 a pill, what was its orignal price?
4. The article said that little of substance was discussed on what to do about the increases. Discuss whether the FDA should be apart of this process or what other types of solutions you would suggest.
5. Are the drug increased prices at the heart of the federal security fraud charges for Mr. Shkereli, or is there another matter?

Source:
Pollack, A. and E. Huetteman. (2016). Martin Shkreli Invokes the Fifth Amendment During Grilling by Congress. The New York Times, Feb. 4 (Retrievable online at http://www.nytimes.com/2016/02/05/business/drug-prices-valeant-martin-shkreli-congress.html)

Lucky Pets

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According to the article, a small but growing number of dedicated food pantries have sprung up to help people feed their pets. This is in response to pleas from people who see their pets as family and will spend their last dollar on pets, despite going hungry themselves.

Questions:
1. What is the ASPCA?
2. How much has the ASPCA awarded in grants to feed pets since 2010? If you were the accountant for the organization, what journal entries would you make regarding these grants?
3. Do you agree or disagree with Joel Berg? Why or why not?
4. Prepare a budget for Mr. Lopez (mentioned in the article). Assume that his rent is $500 and the cost of feeding, clothing, and care of his family is $1,000 per month, his utilities are $400 per month, and his take-home pay is $6.40 per hour after taxes. After paying $60 for pet food per month, what is his disposable income? What percentage is the $60 of all his expenses?

Source:
Hu, W. (2016). Pet Food Pantries Offer Relief to Animal Owners Struggling With Bills. The New York Times, Feb. 7 (Retrievable online at http://www.nytimes.com/2016/02/08/nyregion/pet-food-pantries-offer-relief-to-animal-owners-struggling-with-bills.html)

Enormous Chinese Ponzi Scheme!

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A criminal investigation by Chinese officials has found that the online company, Ezubao, once a dynamo of the financial industry, offered mostly fake investment products to its nearly one million investors. This has highlighted the urgent need for tougher supervision of online financing system in the world’s second largest economy.

Questions:
1. What interest rate was Ezubao offering on most of its “fake” investments? Discuss this in terms of red flags of fraud.
2. The platform for Ezubao was set up by the Yucheng Group in July 2014. What do we now know about Yucheng’s chairman, Ding Ning, and his brother, Ding Dian?
3. What did the company do to hide evidence of the fraud?
4. Explain the importance of peer-to-peer lending in the Chinese economy.

Source:
Gough, N. (2016). Online Lender Ezubao Took $7.6 Billion in Ponzi Scheme, China Says. The New York Times, Feb. 1 (Retrievable at http://www.nytimes.com/2016/02/02/business/dealbook/ezubao-china-fraud.html)