Litigation Finance

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

This article discusses the trend of litigation finance, where individuals and companies are turning to private companies to front the money for legal costs in expensive litigation. Despite having in-house counsel, even larger companies are selling off pieces of lawsuits to improve cash flow and reduce risk.

Questions:

1. Between 2013 and 2014, how much did Burford Capital, a public company traded in Britain, make on lawsuit investments?
2. Is litigation finance a new concept or is there a historic element to the practice? Discuss.
3. Do you agree or disagree with critics that argue that litigation finance threatens the integrity of our legal systems? Explain.

Source:
Schwartz, M. (2015). Should You Be Allowed to Invest in a Lawsuit? The New York Times, Oct. 22 (Retrievable online at http://www.nytimes.com/2015/10/25/magazine/should-you-be-allowed-to-invest-in-a-lawsuit.html)

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Less Chemicals and New Recipes

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

This article discusses moves by Campbell soup to make its soups with more natural ingredients rather than chemical flavoring.

Questions:
1. What is the most recent trend in soup sales?
2. What type of acquisitions has Campbell made recently to obtain toeholds in new markets?
3. What type of retooling changes have been made to Campbell’s Chicken Noodle soup? Why and how long did it take?

Source:
Strom, S. (2015). Campbell Rethinks Its Soup Recipe as Consumer Tastes Change. The New York Times, Nov. 9 (Retrievable online at http://www.nytimes.com/2015/11/10/business/campbell-rethinks-its-recipe-as-consumer-tastes-change.html)

Asset Forfeiture Followup

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.

During 2014, law enforcement officers took more property from American citizens than burglars did. This was a new record.

Questions:
1. What was the source of these data?
2. Why aren’t the asset forfeiture deposit amounts necessarily good indicators of the rise in the use of forfeiture?
3. Why are the net assets of the funds usually seen as a more stable indicator of forfeiture activity?
4. Why is the total of asset forfeitures likely even higher than the graph shows?

Source:
Ingraham, C. (2015). Law enforcement took more stuff from people than burglars did last year. Washington Post, Nov. 23 (Retrievable online at https://www.washingtonpost.com/news/wonk/wp/2015/11/23/cops-took-more-stuff-from-people-than-burglars-did-last-year)
Asset forfeit

Corporate Challenges to Workman’s Comp

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

For quite a while, the state of Texas has allowed companies to opt out of workman’s comp and write their own benefit plans. As a result, benefits for the same body part can differ dramatically depending upon which company you work for.

Questions
1. Who is Bill Minick and what corporate movement is his firm behind?
2. How widespread is the movement? What states allow opting out of workman’s comp and what states are considering it?
3. Minick’s opt-out movement is supported by executives from what firms and why?
4. In many cases, who is the medical director charged with picking doctors and ultimately reviewing whether injuries are work-related? What types of internal controls are available to protect workers rights?
5. According to Minick’s firm’s vision,“We’re talking about reengineering one of the pillars of social justice…” Discuss what this means in terms of the costs and benefits, as you see them.

Price Check

Source:
Grabell, M. and Howard Berkes. Inside Corporate America’s Campaign to Ditch Workers’ Comp. NPR.org (Retrievable online at https://www.propublica.org/article/inside-corporate-americas-plan-to-ditch-workers-comp)

Amazon goes “brick and mortar”

Posted by & filed under Accounting Information Systems, Accounting Principles, All Articles, Auditing, Cost Accounting, Financial Accounting, Intermediate Accounting, Managerial Accounting, Uncategorized.

In an unusual move, Amazon opened a storefront bookstore in Seattle’s University Village mall.

Questions:
1. What are the characteristics of the books sold in the “brick and mortar store”?
2. In addition to books, what other products does the store carry?
3. What do you see as the costs and benefits of this new strategy?

Source:
Mosendz, P. (2015). E-Books King Amazon Opens Brick-and-Mortar Bookstore in Seattle. Newsweek, Nov. 3 (Retrievable online at http://www.newsweek.com/e-books-king-amazon-opens-brick-and-mortar-book-store-seattle-390284)
Amazon Kindle Fire

A Disturbing Trend

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

A controversial law enforcement known as civil asset forfeiture allows police to seize and keep cash and property from people, who are suspected of wrongdoing but may never be charged. Despite public outcries, the use of this procedure has increased in the past decade.

Questions:
1. The figures in reports show “the size of the funds after deposits and expenditures are accounted for.” What “red flag of fraud” issue do you anticipate could creep into this type of reporting?
2. What are some of the reasons presented in the article for why civil asset forfeiture is increasing?
3. Why is it so difficult to get seized property back and what are the costs?
4. What measures or internal controls should be taken to strengthen safeguards against innocent property owners? What potential measures are in the pipeline?

Source:
Ingraham, C. (2015) New report: In tough times, police start seizing a lot more stuff from people. The Washington Post, Nov. 10 (Retrievable online at https://www.washingtonpost.com/news/wonk/wp/2015/11/10/report-in-lean-times-police-start-taking-a-lot-more-stuff-from-people/

File and Suspend is No Longer Available

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

A strategy to increase lifetime Social Security benefits by up to roughly $60,000 for some high-earning couples was eliminated by the Obama Administration on Nov. 2. The strategy, known as file-and-suspend, allowed one spouse to file for Social Security retirement benefits and then suspend the payouts, so that the other spouse could collect spousal benefits based on the suspended spouse’s work history.

Questions:
1. What was the strategic significance of file-and-suspend for retiring couples in addition to what is explained above?
2. What will happen under the new rules?
3. When does the change kick in?
4. What are the costs and benefits of delaying Social Security payments?

Source:
Marte, J. (2015) One of the most lucrative Social Security strategies for married couples is being eliminated. The Washington Post, Nov. 3 (Retrievable online at https://www.washingtonpost.com/news/get-there/wp/2015/11/03/one-of-the-most-lucrative-social-security-strategies-for-married-couples-is-being-eliminated/?hpid=hp_hp-more-top-stories_socialsecurity-710am%3Ahomepage%2Fstory)

Contagion in Earnings Manipulations

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

A new study shows that after one company in an industry is found to have misstated its earnings, others in its industry often followed suit and began massaging their own numbers; this ultimately results in their own restatements.

Questions:
1. Why were the regulatory actions in the study so intriguing and what did they indicate?
2. If bigger and more visible companies did the book-cooking, what pattern did this show?
3. What events and risks did the study show led to deterrence of “copycat earnings manipulations?”
4. What is the biggest problem when conducting this type of study?

Source:
Morgenson, G. (2015). Earnings Misstatements Come in Bunches, Study Says. The New York Times, Oct. 23 (Retrievable online at http://www.nytimes.com/2015/10/25/business/earnings-misstatements-come-in-bunches-study-says.html)

Gentrification Ignites Deed Theft

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

White-collar criminals are employing a variety of schemes in New York City to snatch properties from their owners. Often, they use the secrecy afforded to shell companies to rent out vacated properties until they are caught or sell them to third parties.

Questions:
1. What are some of the signs of forgery on the fraudulent deeds?
2. What types of red flags should homeowners be aware of to prevent deed theft?
3. What role does an LLC provide in these schemes? Discuss.
4. What are the requirements of proposed deed theft legislation? Can you think of any other internal control measures that might help prevent deed theft?
5. Although this article is about shell companies in New York City, is this happening in other locations and, if so, where?

Source:
Saul, S. (2015). Real Estate Shell Companies Scheme to Defraud Owners out of their Homes. The New York Times, Nov. 7 (Retrievable online at http://www.nytimes.com/2015/11/08/nyregion/real-estate-shell-companies-scheme-to-defraud-owners-out-of-their-homes.html)

Incredible Law School Debt

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

The median LSAT score of students admitted to Florida Coastal School of Law was among the lowest 25% nationwide. Despite the fact that the average debt of the 2014 graduating class had $163,000 in debt, may not pass the bar, and probably cannot repay the debt, this school is one of six for-profit law schools in the country.

Questions:
1. What program did Congress establish in 2006 to allow a graduate or professional student to borrow the full amount of tuition, no matter how high, and living expenses? Discuss the costs and benefits of this program.
2. What issues have contributed to the drastic drop in law school applications and students who pass the bar?
3. What is the new “gainful employment rule?”
4. What issues mentioned in this article are leading to the shortage of public defenders and how does this affect the American legal system?

Source:
Editorial Board. (2015). The Law School Debt Crisis. The New York Times, Oct. 24 (Retrievable online at http://www.nytimes.com/2015/10/25/opinion/sunday/the-law-school-debt-crisis.html)
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