CASE STUDY – LETTER FROM PRISON
ETHICS
1. In an interview with the New Zealand Herald, Stephen Richards commented “World Com bankrupt, Enron bankrupt, Adelphia bankrupt. Computer Associates is a radically different environment to those.”
Do you agree/disagree with Richards’ comment? Why/Why not? Discuss the ethical implications of the fraud committed at Computer Associates. In your response you should refer to Part A of the Code of Ethics of the Australian Accounting Profession discussed in Chapter 29 of the text. (25 marks)
EARNINGS MANAGEMENT
2. “Numerous pieces of evidence suggested that earnings management – the managerial use of discretion to influence reported earnings – ...view middle of the document...
The objectives of the project are to:
. To remove inconsistencies and weaknesses in existing revenue recognition standards by providing clear principles for revenue recognition in a robust framework.
. To provide a single revenue recognition model which will improve comparability over a range of industries, companies and geographical boundaries.
. To simplify the preparation of financial statements by reducing the number of requirements to which preparers must refer.
Potential lobbyists were asked to comment on 6 specific questions relating to the revised draft standard. One of the questions is stated below:
Paragraphs 35 and 36 of the revised draft standard specify when an entity transfers control of a good or service over time and, hence, when an entity satisfies a performance obligation and recognises revenue over time.
Do you agree with that proposal? If not, what alternative do you recommend for determining when a good or service is transferred over time and why?
Go to the FASB website ‘Revenue Recognition’ project page at
http://www.fasb.org/jsp/FASB/CommentLetter_C/CommentLetterPage&cid=1218220137090&project_id=2011-230&page_number=4
Choose two comment letters from two different classes of stakeholders i.e. a preparer and a professional body. Each of the two must have responded to the question above.
Summarise the response of each stakeholder (and their suggested alternatives if any) to the above question. Critically evaluate how the response of the stakeholder “fits” with the profile of that stakeholder. (25 marks)
FURTHER GUIDANCE:
1. The word guideline is approximately 2000-2400 words in your answers to questions 1-4 (i.e. 500-600 words per question). The answers to your questions will be greatly enhanced if you reference academic research articles in questions 2 and 3 and official pronouncements in question 4. Better answers will show evidence of additional independent research.
2. The ability to express your views in these specifically limited word counts are an integral part of the assignment, and assignments exceeding the word count will be penalised. Assignments should be double-spaced, in Times New Roman 12 font, with the word count for each section clearly displayed.
3. Further guidance on how to approach the case study will be available from the case study lecture – lecture 6 (April 8). Reference to the UQBS Writing Guide (2010), a copy of which is available under Case Study Assignment in the Learning Activities section of the Black Board course web-site, may be...
