ACCT 30101 Carlos Briones Revenue Recognition Case Amanda Eng Alipasha Ziaee 1. Revenue Recognition for MultipleElement Arrangements The Case of Velocity Cellular a) According the ASC 60525255 there are two criteria that must be met in order to be considered a separate deliverable and a separate unit of accounting:
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[1] What business was WorldCom in? WorldCom was in the business of telecommunications. Where was WorldCom located? WorldCom was located in Clinton‚ Mississippi. Who was the CEO? The CEO was Bernie Ebbers. Who was the CFO? The CFO was Scott Sullivan. What are the names of the two members of the internal audit staff who worked with Cynthia on their secret investigation? Gene Morse and Glyn Smith What made the internal auditors think that possibly there was a need to investigate WorldCom’s
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The WorldCom Fraud © 2003‚ 2005 by the AICPA This presentation is intended for use in higher education for instructional purposes only‚ and is not for application in practice. Permission is granted to classroom instructors to photocopy this document for classroom teaching purposes only. All other rights are reserved. Copyright © 2003‚ 2005 by the American Institute of Certified Public Accountants‚ Inc.‚ New York‚ New York. WorldCom’s Background • Awoke the sleeping giant by leading the telecom
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AVOIDING INVESTMENTS IN FRAUDULENT COMPANIES: THE WORLDCOM FRAUD Introduction The purpose of this report is to investigate and discuss the accounting fraud that occurred at WorldCom in order to recommend improved strategies to Berkshire Hathaway’s management for avoiding investments in companies with fraudulent financials. Accounting fraud is a crime committed by high level employees at an organization to manipulate the organization’s financial statements and intentionally disguise company
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the actions taken by WorldCom managers not detected earlier? What processes or systems should be in place to prevent or detect quickly the types of actions that occurred in WorldCom? The first reason is that both internal audit and external audit of WorldCom were not performing their role as intended. Generally‚ internal audit mainly focus on the reliability of financial reporting and the effectiveness of operations‚ and reports directly to the Board of Directors. In WorldCom‚ however‚ internal audit
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How SAB affects Wareham’s revenue recognition? Accordingly to SAB 101‚ all of the following conditions should be accomplished to recognize revenue. During our analyses‚ we have identified several missing conditions in current situation‚ accordingly to information provided. * Evidence of Order Arrangement: SAB 101 requires an evidence to identify any transaction as a formal sales order. During our analyses we have found that in the sales transactions tested by Soma Desai‚ only the Technology
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M1. Case Study Assignment: Fraud at WorldCom 1. Who were the major characters in WorldCom? There are a couple of major characters that played their roles in the downfall of WorldCom. Mr. Bernard J. (Bernie) Ebbers‚ one of the founders of the original small long-distance carrier‚ was asked to take charge of the company during its early struggles. It was under his tenure that WorldCom began its expanding pursuits and aggressive acquisitions. Although Mr. Ebbers was he head of the company‚ their CFO
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a- i) According to SCON 6 article 25‚ assets are probable future economic benefits obtained or controlled by a particular entity as a result of past transactions or events. Assets has three characteristics: it embodies a probable future benefit that involves a capacity or in combination with other assets‚ to contribute directly or indirectly to future net cash inflows‚ a particular entity can obtain the benefit and control others’ access to it and the transaction or other event giving rise to the
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whether these expenses have been paid in cash or not in that year. The same holds true for revenues‚ i.e.‚ revenues earned in a specific accounting period are construed as incomes of the same period‚ irrespective of their receipts. This concept is also known as the accrual theory of accounting or accrual accounting. This concept applies equally to revenues and expenses. In the accrual basis of accounting Revenue is recognized when it is realized‚ that is‚ when the sale is complete or not. Similarly
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EXECUTIVE SUMMARY Revenue Recognition and Wareham SC Systems‚ Inc. Wareham SC Systems‚ Inc. is a capital equipment and testing instrument manufacturer and supplier comprised of three divisions: the Glendale Division‚ the Advanced Technology Division and the Technical Devices Division (Anthony‚ Hawkins‚ & Merchant‚ 2011‚ p. 137). In 1999‚ Somai Desai‚ the company’s chief financial officer‚ received news that the Security Exchange Commision (SEC) issued a new set of revenue recognition and reporting
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