financial reporting or performance measurements are tied to financial measuremen

May 8th, 2014
SoccerBoss
Category:
Accounting
Price: $10 USD

Question description

Current events in business affecting financial reporting or performance measurements are tied to financial measurements. Provide the URL of a short article online and describe how the company you researched is affected by its financial reporting issue.

200-300 words. APA formatted.

Original work as it will be checked before final payment.

Please do not use any of the following companies.

Norris, F. (2011, December 8). Deep Roots Of Fraud At Olympus. The New York Times. Retrieved May 8, 2014, from http://www.nytimes.com/2011/12/09/business/deep-roots-of-fraud-at-olympus.html?_r=0

Geico http://adage.com/article/cmo-strategy/geico-overtakes-allstate-2-auto-insurer/291947/

Dell SEC. (2010). SEC Charges Dell and Senior Executives with Disclosure and Accounting Fraud. US Securities and Exchange Commission. Retrieved from http://www.sec.gov/news/press/2010/2010-131.htm

USPS The Postal Service spins its Q3 financial report. (2013). Save the Post Office. Retrieved May 5, 2014 from www.savethepostoffice.com/ when-good-news-bad-news- postal-service-spins-its-Q3- financial -report

Here is an example of how this assignment should look but should be more complex….
In July of 2010, the Securities and Exchange Commission charged Dell Inc. and some of its executives with committing fraudulent accounting. The things they did caused earnings to appear higher than they really were to Wall Street investors. The change the executives made was to list income received from Intel through an exclusivity deal as operating income.

The exclusivity deal with Intel was payment to Dell in exchange for them only using Intel brand processors in the production of computers. The payments were incorrectly recorded as operating income, causing their earnings from sales appear higher than they were. It also made operating expenses appear lower than they really were. This occurred between the years 2002 and 2006. In 2003, the payments represented ten percent of their operating income, and in 2006 it was up to thirty-eight percent. In the first fiscal quarter of 2007, the Intel payments were recorded as seventy-six percent of Dell’s operating income. In addition to the Intel payments, senior former accounting personnel also maintained some reserve funds that they used to cover shortages in operating results between 2002 and 2005. These adjustments made it appear that they were meeting income targets while reducing operating expenses. An additional accusation from the SEC was that Dell used these reserve manipulations to “materially misstate its earnings and it operating expenses as a percentage of revenue” (SEC, 2010) for more than 3 years.

In the second quarter of 2007, Intel stopped making payments to Dell. Operating income fell to its proper level, and the investors wanted to know why there was such a sudden decline. Dell accountants falsely claimed it was due to a sharp drop in sales after they made some price changes. The result of these actions was that the executives paid fines to the SEC varying from $3 to $4 million. Dell, Inc. paid $100 million in fines. The accountants paid penalties ranging from $50,000 to $83,000. Investors falsely believed that Dell was more profitable than it actually was, which may have influence their investment decisions.
Reference:
SEC. (2010). SEC Charges Dell and Senior Executives with Disclosure and Accounting Fraud. US Securities and Exchange Commission. Retrieved from http://www.sec.gov/news/press/2010/2010-131.htm


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