That’s the Walmart Way!

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

An Oklahoma City Walmart is asking employees to donate food to help their coworkers make ends meet during the holiday season. The company drew criticism for similar employee food drives a year ago. Besides incurring a total public assistance cost of $6.2 billion per year, Walmart has been criticized for running a corporate charity called the Associates in Critical Need Fund, which recently made the news because the company uses it to lure corporate employees into chipping into the company PAC that spends money to influence elections and lawmakers.

Questions:
1. An employee snapped the photo below, but did not want to be identified. Why?
2. Why is Walmart facing formal charges? What have they been accused of doing?
3. Can you make a journal entry for paid sick leave for the Oklahoma City Walmart employees? Why or why not?
4. Discuss the strategic management costs and benefits for Walmart’s employment of more full-time workers? Which position do you favor?

Source:
Pyke, A. (2014). Walmart Asks Employees To Donate Food To Help Feed Their Coworkers. ThinkProgress.org, Nov. 20 (Retrievable online at http://thinkprogress.org/economy/2014/11/20/3595067/walmart-food-drive-oklahoma/)

Covert, B. (2014). National Labor Relations Board To Prosecute Walmart For Violating Workers’ Rights. ThinkProgress.org, Nov. 18 (Retrievable online at http://thinkprogress.org/economy/2013/11/18/2962751/nlrb-walmart/)

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Investment Bankers: Less trustworthy than prison inmates?

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

According to The Atlantic, a new paper in Nature takes a scientific approach to the accusations of dishonesty in the banking industry.

Participants in the study indicated that they thought bankers would be more dishonest than prison inmates in over-reporting successful coin flips.

Questions:
1. According to economist Marie Claire Villeval, what are the implications of the study?
2. Even though banks are posting stellar profits, why aren’t students as attracted to investment banking?
3. Do you think that capping bonuses in this environment will reform the investment banking industry?

Source:
Lam, B. (2014). Is Cheating a Part of Banking Culture? The Atlantic, Nov. 21 (Retrievable online at http://www.theatlantic.com/business/archive/2014/11/is-cheating-a-part-of-banking-culture/383005/)

New Class Action Lawsuit

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

Zillow, the number one online real estate website, is facing a $5 million class action lawsuit for intimidating employees to skip meals and work long hours without pay.

Questions:
1. Who was Zillow’s top competition and how much did Zillow pay to buy the company?
2. Would this acquisition be reported on the Statement of Cash Flows? If so, where?
3. What other online companies have had wage disputes and/or violations of labor laws?

Source:
Williams, Lauren C. (2014). The Facebook Of Real Estate Allegedly Forced Workers To Skip Meals And Work Without Pay. ThinkProgress.org, November 21 (Retrievable online at http://thinkprogress.org/economy/2014/11/21/3595562/zillow-lawsuit/)
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It’s Not Over Yet!

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

Looking at GDP reporting GDP on a quarter-on-quarter basis, it turns out that Greece’s six-year recession is over, but recovery is far from near. The country’s economy grew at a 3.2 percent annual pace in the first quarter, 1.2 percent in the second, and 2.8 percent in the most recent one. However, unemployment is 25.9%.

Questions:
1. Why have falling Greek prices for over a year now been both a cure and a disease? Explain.
2. When does the European Commission predict that Greece will be back to the economy it had in 2007?
3. What is the biggest difference between Greece’s current Great Depression as compared to the U.S. Great Depression between 1929 and 1939?

Source:
O’Brien, M. (2014). Greece’s recession is over, but its depression will be the worst in history. The Washington Post, Nov. 14 (Retrievable online at http://www.washingtonpost.com/blogs/wonkblog/wp/2014/11/14/greeces-recession-is-over-but-unemployment-is-still-25-9-percent/)

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The Never-Ending Foreclosure Crisis: Robo Signer Redux

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

Fannie is trying to recoup the difference between what the borrowers owed on the mortgages when they were foreclosed and the amount Fannie received when it resold the properties. In Florida, these deficiency judgments can be pursued for 20 years, and borrowers must also pay a compounded annual interest rate of 4.5 percent. Several legal experts claim that Fannie Mae is not entitled to collect on those debts because the foreclosure was unlawful, due to robo-signers.

Questions:
1. What does the recently filed class action suit against against Dyck-O’Neal, a debt collector for Fannie Mae, claim?
2. Approximately what percentage of borrowers don’t even show up in court for the deficiency judgments?
3. In what states is it legal for lenders to pursue deficiency judgments? Why do you think this article focused on Florida? Give several reasons.

Source:
Morgenson, G. (2014) Borrowers, Beware: The Robo-signers Aren’t Finished Yet. The New York Times, Nov.15 (Retrievable online at http://www.nytimes.com/2014/11/16/business/borrowers-beware-the-robosigners-arent-finished-yet.html?mabReward=RI%3A5&src=recg&mabReward=RI%3A5&module=Ribbon&version=origin&region=Header&action=click&contentCollection=Recommended&pgtype=Blogs)

Congressional Insider Trading?

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

Nineteen months ago, with only 20 minutes remaining in the trading day, a Washington-based broker-dealer, Height Securities, blasted out a “flash report” to nearly 200 clients, including hedge funds on Wall Street that predicted a raise in Medicare reimbursement rates. This sent many health insurance companies’ stocks soaring. Regulators are now trying to investigate insider trading among congressional employees and firms that provide political intelligence leaks, but these efforts to build a case inside the beltway of Washington, D.C. are proving challenging.

Questions:
1. After several embarrassing news items about members of Congress who were trading stocks based on information obtained in committee hearings, who stripped the language out of the Stock Act that would have required disclosures by political intelligence firms? Discuss the current position of that person.
2. Why is it so hard for the SEC to argue that this news was nonpublic information?
3. Do you think that the Ivan F. Boesky case from the 1980s is different from what is going on today? Explain.

Source:
Creswell, J. (2014). Tip on Medicare Spurs Insider Trading Investigation. The New York Times, Nov. 14 (Retrievable online at http://www.nytimes.com/2014/11/15/business/tip-on-medicare-spurs-insider-trading-investigation.html?hpw&rref=business&action=click&pgtype=Homepage&module=well-region&region=bottom-well&WT.nav=bottom-well&_r=0)
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Medical Malpractice Reform: Will it save money?

Posted by & filed under Accounting Information Systems, Accounting Principles, Auditing, Cost Accounting, Financial Accounting, Managerial Accounting, Uncategorized, Video Updates.

According to the New York Times, many people believe that medical malpractice reform is the key to removing waste from the health care system and making the practice of medicine better. But a growing body of evidence shows that belief is most likely mistaken.

Questions:
1. What is the rationale for malpractice reform as cost control?
2. What were the costs of the malpractice system in the United States, as detailed in this article?
3. What is defensive medicine? According to the article, if malpractice premiums fall by as a huge change of 30 percent, what would be the effect on spending for defensive medicine?
4. What happened to the cost savings in Florida? How has that changed the healthcare system?

Source:
Carroll, A.E. (2014). Malpractice Reform Won’t Do Much to Reduce Health Spending. The New York Times, Nov. 3 (Retrievable online at http://www.nytimes.com/2014/11/04/upshot/malpractice-reform-wont-do-much-to-reduce-health-spending.html?action=click&contentCollection=Health&region=Footer&module=MoreInSection&pgtype=Blogs&abt=0002&abg=0)

Repatenting for Profits and the High Costs of Breathing

Posted by & filed under Accounting Principles, Cost Accounting, Financial Accounting, Managerial Accounting.

Unlike other countries, where the government directly or indirectly sets an allowed national wholesale price for each drug, the United States leaves prices to market competition among pharmaceutical companies, including generic drug makers. This has resulted in a vicious cycle of repatenting old drugs that use to cost pennies with new delivery systems and processes that now allow the pharmaceutical companies to charge extremely high prices. This article focuses on the skyrocketing prices of asthma medicines.

Questions:
1. Besides repatenting, what other factors are increasing the prices of older drugs in the U.S.?
2. Why are these practices allowed to continue in the U.S.?
3. Take the example of California’s Medicaid program that spent $61 million on asthma medicine last year. Using the information in the article, calculate the cost savings for Medicaid program in California.
(a) Assume that all of this is Rhinocort Aqua, which costs $250 in California, but $7 in Europe.
(b) Assume that all of this is Pulmicort, which costs $175 in the U.S., but $20 in Britain.
(c) Assume that all of this is Albuterol, which costs $100 in the U.S., but cost $15 before repatenting.
4. Discuss the ethics and legality of Pay for Delay schemes.

Source:
Rosenthal, E. (2013). The Soaring Cost of a Simple Breath. The New York Times, Oct. 12 (Retrievable online at http://www.nytimes.com/2013/10/13/us/the-soaring-cost-of-a-simple-breath.html?pagewanted=all&_r=0)

Asthma Drugs

Attack of the SuperCookies!

Posted by & filed under Accounting Information Systems, Accounting Principles, Auditing, Cost Accounting, Financial Reporting and Analysis, International Accounting, Managerial Accounting, Uncategorized.

What is your privacy worth? Most people would say A LOT!

According to Craig Timberg, Verizon and AT&T have been quietly tracking the Internet activity of more than 100 million cellular customers with what critics have dubbed “supercookies.” These supercookies cannot be erased and can even get around the “private” or “incognito” settings on your cell phone. Your interests and tastes and patterns of Internet visits are worth a lot to companies and may even be worth more to a wide range of outsiders — including intelligence services.

One civil liberties group, the Electronic Frontier Foundation, says it has raised its concerns with the Federal Communications Commission (FCC) and is contemplating formal legal action to block Verizon.

Questions:
1. Discuss the benefits of the “opt in” versus the “opt out” permissions. Who benefits in each case and what are the risks involved?
2. What is the process known as “de-anonymizing” a user? Discuss the risks and ethical implications of this.
3. What implications could this have for the accounting information and the accounting profession?
4. What are some of the legal issues and Acts that are potentially being violated by these supercookies?
5. If the courts find that the notification efforts by Verizon and AT&T were not adequate, how might they determine the valuation of damages to consider?
6. Based on your answer in #5, if either company faced damages due to a violation of laws, should this be reported in the annual report and where?

Source:
Timberg, C. (2014). Verizon, AT&T tracking their users with ‘supercookies.’ The Washington Post, Nov. 3 (Retrievable online at http://www.washingtonpost.com/business/technology/verizon-atandt-tracking-their-users-with-super-cookies/2014/11/03/7bbbf382-6395-11e4-bb14-4cfea1e742d5_story.html?hpid=z4)
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Ouch! This may sting a little.

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

According to the New York Times, officials are saying that short-term pain is necessary to put the European economy back on track. Regulators in the United States forced a similar catharsis on American banks in 2009, helping set the stage for the current recovery.

Questions:
1. What was the result of the timid approach taken by the eurozone to a failing economy? Why was this like Japan?
2. Who is Europe’s new banking overseer and what are some of the tough measures she intends to utilize?
3. The main goals of the new reviews are to expose so-called zombie banks. What are these?
4. What are the stress tests that the article mentions?
5. Briefly summarize the Cyprus crisis.

Source:

Ewing, J. and Thomas, L. (2014) Regulators Are Gauging Europe’s Banks, and Remedy May Sting a Little. The New York Times, Oct. 17 (Retrievable online at http://dealbook.nytimes.com/2014/10/17/to-restore-confidence-in-economy-a-test-of-europes-banks/)
Proxy fight