BALTIMORE CITY COMMUNITY COLLEGE
Principles of Accounting
Fall 2016
Written Assignment Instructions
Please read articles on any five unrelated Accounting topics. What do I mean by unrelated
topics? For instance, if you selected one article involving accounting education in colleges, then
your second article cannot be on the same or similar topic. Your topics do not have to be
restricted to accounting topics covered in the course.
ALL ARTICLES MUST BE RESEARCHED USING THE INTERNET. Your Accounting
articles have to be from The CPA Journal, Journal of Accountancy or Accountant Today.
The articles must be published in 2015 or 2016 and must contain at least 2 pages (equivalent to
8.5”x11”) of text.
On each topic, you are required to write 1 page. Thus you will have written a total of 5 pages.
Each topic is divided into two sections and has to be clearly identified, as follows:
Section 1-Summary of the article in your own words (0.5 pages long)
Section 2-Your comments, opinions and any other feedback you wish to provide on the topic
(0.5 pages long).
Format
Use letter size paper (8.5"x11")
Spacing of Work: 1.5 times
Normal Print: 12 font size
Margins: 1" on all sides
Your work must be presented as follows:
I Cover Sheet
Show your name, course name and number, and semester. (3%)
II The next page should list the articles presented with the title of the article, name and date of
the source publication and links to them. (2%)
III Next, you will present all of the 5 write ups. Each write up must start on a separate page. At
the top of each write up, just show the name of the article only. 105 points (22 % per write up)
IV. Next, cite your articles using the APA format.(10 %)
This assignment is designed to broaden your understanding of the accounting discipline as well
as sharpen your Internet research, communication and critical thinking skills.
There will be an automatic deduction of points if your work is not presented as specified.
Due: November 13, 11.59pm EST
Students who wish to submit the work early by 11.59pm EST, November 9 will be eligible
for 10 points bonus.
Late work will be penalized at the rate of 10 points for each 24 hour period that your work is late
up to a maximum late penalty of 70 points. No credit will be given for late work submitted
after 11.59pm EST, November 20
The next page is a sample work of student in a previous semester. Use it only as a general guide.
Please consult my instructions above as I sometimes make changes in the assignment from one
semester to the next.
WRITTEN
ASSIGNMENT
ACCT 201
Student Name
ARTICLES
(2010, July). Accounting for Small Businesses: The Role of the IFRS. The CPA Journal
Web Link:
(2010, March). A Looming Crisis for Pensions. The CPA Journal
Web link:
(2010, December). When It Comes to Fraud, It's Better to Be Safe than Sorry. The CPA Journal
Web Link:
(2010, April). Attracting and Retaining Talent: The Importance of First Impressions. The CPA
Journal
Web link:
“Attracting and Retaining Talent: The Importance of First Impressions”
Summary
In this article, the authors discuss one of the most pressing issues facing accounting
firms in a time of economic turmoil. They present the necessity of accounting firms to make
highly impactful first impressions on candidates for available positions. As the market for skilled
workers becomes more competitive, firms have to go above and beyond the normal routine to
obtain and retain employees. If they do not take the necessary steps, they may not stay in
business.
While there are more workers available for positions due to the recent recession, many
do not possess the required skills for specialized jobs, making one of the top 10 most difficult
positions to fill is that of the accountant (Yamanmura, Birk, & Cossitt, 2010). This fact makes it
imperative for an accounting firm to find ways to attract candidates and once they have them,
give them a reason to stay.
The authors suggest that the first impression a firm makes is the one of the most
important factors in a candidate’s decision to begin or continue working for the company. They
then outline how these first impressions impact the worker. The more positive the initial
impression is, the more likely the employee is to be excited about working for the company and
the more likely they are to stay.
The authors outline a plan for accounting firms to use to manage first impressions. The
first step in the plan is to train recruiters who can appeal to the desires of potential recruits.
The next step is to set a clear vision and expectation for the new employee, by preparing
assignments, scheduling training, and setting goals. Finally, the authors suggest that for a firm
to retain an employee, they must offer a fair balance between work and life.
It is stated that Generation Y, people with birthdays from the 1970s to 1990s make up
the majority of candidates for accounting positions. People in Gen Y want to be challenged,
want to grow and learn, and are not afraid of advancement. Employees from this generation
want to have direction and purpose. If a firm can provide these things, they are likely to employ
workers who feel a sense of ownership in the company. Their workers will not just show up
until something better presents itself, they will care about results and work diligently for the
company’s success.
Reaction
The article captured my attention because two years ago, I found myself in search of
employment due to changes my previous employer made to streamline operations and cut
costs. It opened my eyes to the fact that there is a lot of opportunity for employment in the
field of accounting. I have worked in several different industries and in most of those industries,
I had to compete with other qualified applicants for the position I was interested in. It would
seem that the demand for highly skilled accountants is on the rise and the supply is very
limited. Because of this, accounting firms need to compete for employees. The first step to
employing talent is making a great first impression.
I understand how a first impression can affect the attitude of an employee. I
experienced this with a previous employer. I cared about my position and worked hard towards
my personal success. I love the challenges that my job presented to me and did what was
necessary to overcome them. However, the recruiting process was prolonged and disorganized.
My first impression of employment with the company was not a good one. As a result, I kept
my eyes open for other opportunities.
As a “Gen Y” member, I agree with the authors’ suggestion that working with positive
people in a friendly environment is important. I want to be challenged and certainly enjoy
learning new skills. If I feel that my current path does not provide me the opportunity to grow
and advance, I will indeed look for a change.
Having experienced firsthand how a first impression can impact an employee’s attitude
towards the company he works for, I definitely agree that accounting firms must put a plan into
place to make sure that first impressions it makes, are lasting and positive. In doing so,
accounting firms can be sure to attract the best talent and have employees who feel
empowered and motivated to grow and improve the company.
“When It Comes to Fraud, It’s Better to Be Safe than Sorry”
Summary
In this article, the author presents three scenarios involving fraud that he encountered
during his career as an accountant. In each of the three stories, the author demonstrates the
necessity for leaders to make ethical decisions when preparing financial statements and
reporting performance.
In the first scenario, a bookkeeper at one of CS Company’s offices altered the office’s
monthly statements to improve results. The bookkeeper changed the accounts receivable aging
to hide the fact that the office was not efficient at collecting the money it was owed. The
monthly reports were analyzed and compared to the statements of other offices. The
misstatements were discovered and fixed and an investigation ensued. As a result of the
investigation, it was determined that the company didn’t lose any money due to the
alterations, collections on accounts payable were made, and the bookkeeper was fired.
The second scenario involved a company that had six US and three foreign
manufacturing facilities. The product had become obsolete and the sales of the product were
declining.
The company had positive profits, but mostly because of one of its foreign
subsidiaries. The subsidiary was audited by a local auditing team as well as the corporation’s
auditors. It was discovered that there were many errors in the subsidiaries financial statements,
which drastically inflated the profits. The CEO and the controller of the subsidiary were aware
of the misstatements and did not report them, so they were both fired. It turns out, the
director of the subsidiary was inflating its sales and its accounts receivable. The company’s poor
performance and its lack of managerial ethics and attention ultimately caused it to go out of
business.
The final scenario involves an automobile parts manufacturer. When the company’s CFO
discovered some inconsistencies in its subsidiaries numbers, he had a corporate controller
investigate the irregularities by herself. The investigation progressed slowly. When the
controller made her reports to the CFO, he simply told her to continue her investigation and did
not report any of the findings to the SEC. Ultimately, the CFO was replaced due to poor
performance. The new CFO reported the findings to the auditing board and full investigation
was performed.
These scenarios show that discovering errors and deviations to financial reports is only
the one step. Once these things are discovered, they must be reported immediately to auditors,
so that any problems resulting from the errors can be swiftly resolved.
Many errors can be prevented with adequate attention from corporate management
and effective controls. The situation in the second scenario could have been prevented if
managers had set clear expectations, communicated properly and implemented controls to
keep the manager at the subsidiary from making adjustments to the financial statements.
Reaction
I found this article interesting and chose it because the company I work for has controls
in place to detect non-compliance with government and company guidelines. All of our
locations are visited at least twice a year by a control review team. The team will come
prepared with information regarding accounts opened, transactions that we have processed,
and procedures we have followed.
The auditors spend a day reviewing our procedures to ensure our compliance with laws.
At the end of the review we get a score based on their findings. This can be very stressful but if
we are operationally sound and acting with integrity, there really is nothing to worry about. As
stated in the article, integrity should be the primary focus.
You have to question peoples’ motives for making unethical decisions, such as altering
performance reporting. What was the benefit to the bookkeeper to overstate accounts
receivable collection? I think the bookkeeper made these changes to cover up the lack of effort
to actually collect on the accounts. Could the errors in the second scenario have been
prevented? If the directors of corporate management had communicated properly with its
subsidiary, and not neglected it, I think that this situation could have been easily avoided. With
clear direction from corporate management, the director of the subsidiary would not have
made inaccurate alterations to the financial statements and the situation would have been
avoided.
I can understand the pressure that some of these subsidiaries must receive from
corporate officers. I work in a partially commission based, goal oriented sales environment. Our
“numbers” are under constant scrutiny. We have to report frequently to middle management
on what we are doing to achieve our goals. The temptation frequently arises to overstate our
performance. There is rarely any benefit to doing so. Overstating my performance would only
tarnish my reputation and lead to more problems in the future.
“Accounting for Small Businesses: The Role of the IFRS”
Summary
United States based CPAs have had two methods or sets of standards for reporting
financial information; the US Generally Accepted Account Principals, and Other Comprehensive
Basis of Accounting. This has presented a problem for accountants, as many of the reporting
requirements of GAAP are very demanding, and don’t necessarily apply to all small businesses.
Because of this, accountants have generally agreed that there needs to be a set of accounting
standards developed specifically for small businesses.
The International Accounting Standards Board released the International Financial
Reporting Standards for Small to Medium Sized Entities (IFRS for SMEs) in May of 2009. In this
article, the authors discuss the results of several surveys conducted of CPAs regarding their
willingness or likelihood to adopt them.
The authors received 243 survey responses from CPAs. The survey posed questions to
CPAs about their knowledge of IFRS and IFRS for SMEs, as well as their willingness to adopt
IFRS. More than half of the respondents believed that there should be different reporting
requirements for private and public companies. However, most of the CPAs who responded to
the survey had little detailed knowledge about IFRS and IFRS for SMEs. As a result, it was
determined that most CPAs would continue to use their current accounting basis even if the US
adopted IFRS. They also reported that their clients’ knowledge of IFRS would be a very
significant barrier in their adoption of IFRS. The survey also asked the CPAs what type of
accounting they use. The results show that only small business used cash and tax basis account
and only large business used IFRS.
Next, the author discusses two conclusions from the survey. One conclusion is that
different types of businesses have different needs regarding accounting standards. The other
conclusion is that CPAs and their clients need more detail before adopting IFRS and IFRS for
SMEs.
Reaction
After reading this article, I agree that different types of business need different
accounting standards. I work with a lot of small business owners, with less than 10 employees. I
can see the importance of a simple set of accounting standards a small business that does less
than $10 million in revenue per year, or has a very limited number of transaction types.
On several occasions, business owners have come to me to establish a line of credit.
One requirement is that the customer must be able to provide two years of financial
statements. I feel that if there are specific accounting standards for SMEs, than it may be easier
for these customers to provide the necessary documents, obtain their lines of credit and use
that to enhance and grow their business.
I do find it interesting that CPAs are reluctant to change the basis of accounting they use
for their clients. I think that a simpler set of standards for financial reporting would make their
job easier. It may take them some time to learn all of the details and requirements of IFRS.
However, I think it will ultimately help their clients, especially if they intend to grown beyond
US
borders.
“A Looming Crisis for Pensions”
Summary
We learn that underfunding of pension plans could have drastic negative repercussions.
Financial accountants have a very daunting task in managing pension plans. They have to
determine how much money needs to be contributed to a pension plan by a company, what
the value of the pension plan currently is and what it may be worth in the future.
The authors present several questions that accountants face when determining pension
plan funding. They are: How many more years will an employee work? How will an employee’s
compensation over time affect amounts promised in retirement? For how many years after
retirement will an employee live and collect compensation or other post-retirement benefits?
What investment returns will be earned on funds designated to meet future retirement
obligations? (Easterday & Eaton, 2010).
The two types of pension plans are defined contribution (DC), which includes 401k and
403b retirement plans, and defined benefit plan (DB), which is a type of deferred
compensation. In a DC type plan, employees make a contribution to the plan, the employer
may match it, and the employee is responsible for the performance of the plan.
Generally in DB plans, an employee is promised a certain percentage of their income to
be paid after retirement. In the DB plan, employers set money aside and are responsible for
investing these funds. The longer an employee stays with a company that offers a DB plan, the
great the obligation is for the employer. If the assets in the plan are less than the total
obligation, the plan is considered underfunded.
There are three major reasons a pension plan has funding problems. If the plans assets
are invested and those investments perform poorly, the plans funding can be negatively
affected. Delays in paying cash contributions to the plan by the employer will also result in
under funding. Accountants and decision makers may have overestimated interest rates. This
may also cause underfunding in pension plans.
The author provides us with an example of a drastic underfunding problem in Cincinnati,
Ohio. The city of Cincinnati has only made partial contributions to its pension plans to free up
cash for other needs. As of December of 2008, the city reported that its pension plans were
underfunded by nearly $913 million dollars. This could have very negative tax implications for
city residents, as they may need to bear the burden of this deficit.
The Pension Benefit Guaranty Corporation currently protects corporations and
employees if the company fails and the pension plan is underfunded. Unfortunately, the PBGC
has protected more companies than it can handle. It reported a $33.5 billion deficit in the first
half 2009.
While many companies have moved away from DB plans, those that do have a
responsibility to its employees to manage and fun them. If not, they’re putting the financial
security of its people in jeopardy.
Reaction
I do not understand why an employer would put itself into a position where it did not
provide adequate funding to its pension plan. I know that idle cash does not benefit the
company, but by not contributing the necessary funds to the pension plan, the company would
be putting the economic security of its employees at risk.
I chose this article because my family’s financial security has been on my mind a lot
recently. Having just been married, retirement discussions are a frequent occurrence in my
home. Who is going to retire first? What do we need to retire? My wife and I both have DC
plans with our employers. Bank of America, my employer also offers a 4% per year Defined
Benefit plan. With recent developments in the banking industry, it worries me that BOA may
not make adequate contributions to my pension, in order to utilize those funds for other
purposes. While I am confident that Bank of America will not go out of business before I retire,
the prospect of being asked to accept a reduced benefit if my pension plan is inadequately
funded, does not appeal to me.
I can see that financial accountants have to carefully calculate how much money and
when a firm needs to contribute to its DB plan. This must be done in order to ensure the
company doesn’t have to play catch up. By making adequate contributions, the company shows
that it has the employees’ best interest in mind.
The last paragraph of the article states that thoughtful reform is required. I located a
plan that I find very interesting. Maryland’s unfunded liability for pension plans as of January,
21, 2011 was $19 billion dollars. By adjusting retirement age of state workers, changing benefit
calculation from highest three years of salary to highest five years, and requiring a ten year
vesting period as opposed to five, the Governor of Maryland hopes to reduce this unfunded
pension liability by $7 million dollars (O'Malley, 2011). Let’s hope it works.
Works Cited
Christie, N., Brozovsky, J., & Hicks, S. (2010, July). Accounting for Small Businesses: The Role of
the IFRS. The CPA Journal, pp. 40-43.
Easterday, K., & Eaton, T. V. (2010, March). A Looming Crisis for Pensions. The CPA Journal, pp.
56-58.
O'Malley, M. (2011, January 21). Reforming Maryland's Pension System: A Path to
Sustainability. Retrieved March 6, 2011, from Maryland.gov:
http://www.governor.maryland.gov/documents/RetirementReform.pdf
Weinstein, E. A. (2010, December). When It Comes to Fraud, It's Better to Be Safe than Sorry.
The CPA Journal, pp. 6, 8-9.
Yamanmura, J., Birk, C. A., & Cossitt, B. J. (2010, April). Attracting and Retaining Talent: The
Importance of First Impressions. The CPA Journal, pp. 58-60.
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