Re: Crazy Eddie, what happened to gross margins over time? How might this be an indicator of accounting issues?
Re: Sunbeam, if you can put yourself in the audit partner’s position, do you think you might have been inclined to sign off on the engagement, notwithstanding the knowledge of the accounting issue?
Re: Sunbeam, what was Dunlap’s nickname? What are “cookie jar” reserves? How could the Sunbeam issues have been prevented?
Re: CalMicro, what are some of the indicators that may have suggested that “something” was amiss in the accounting?
Re: WorldCom, can you recreate the journal entry that took “line costs, fees paid to lease portions of other companies’ telephone networks, out of operating-expense accounts where they belonged and tuck them into capital accounts”?
Re: MicroStrategy, how did the national office of PWC learn that there may be “issues” with the financial statements that had been approved by one of its own partners?
Pro forma (non-GAAP, adjusted) earnings are much higher than GAAP-compliant earnings. The GAAP gap is widening. Should something be done about this?
Companies make up their own metrics to define success, continuing trend of non-GAAP measures. What do you think about this? Is it “ok”?
Should bankers’ bonuses be held back for 3 years in case a clawback is needed? Should it be 5 years? 10 years? Who should be included in the withheld bonuses? What do you think could be some of the unintended consequences of holding back bonuses?
Excellent points raised in this article. What are the implications for firms seeking relatively cheap credit? Are the days of borrowing (cheaply) to buy back stock coming to an end? Should capital use be regulated? Will it politicize credit?
We’ve seen this before, namely firms using non-GAAP earnings measures that make firms look better than they do under GAAP-compliant earnings. Reg G covers how firms may present non-GAAP measures. So, why is this a newly urgent problem? In your opinion, should anything new be done?
Can you describe why the average DB plan is only 78% funded as of 2/16, whereas it was 95% funded at the end of 2013?
Herbalife misstated a pro forma measure that it created. In your opinion, should such disclosures (pro forma metrics) be regulated or audited?
EBBS, or earnings before the bad stuff, was cumulatively + $45 billion in energy sector in 2015. On a GAAP basis, earnings totaled a loss of $48 billion. Which reflects “reality”? Why? What should be done about this disparity, if anything?
Do you think allowing multinationals to report in IFRS would weaken or strengthen financial disclosures? How would you test your hypothesis?
GE’s CEO missed a performance target and therefore did not receive all of his performance compensation, which was in the form of stock awards. In your opinion, should the pay have been in the form of stock options, instead of stock awards (restricted stock)? Why or why not?
Moody’s downgraded Anglo American’s debt to “junk.” Is there an obligation for firms to give prospective disclosures that would be an advance warning to such potential actions by rating agencies? If not, in your opinion, should there be? Are there indicators in the financial statements? If so, what are they?
Why do you think Boeing’s accounting is being “probed” if the accounting complies with GAAP? Have you heard of “program accounting” before this case? Could you explain it? Should firms be investigated if good faith estimates prove to be, in hindsight, inaccurate?
