Is materiality best defined and “operationalized’ by the accounting profession or by the legal profession? If you had to write a definition of materiality, how would you proceed? What data would you need? What would your definition be?
If you were an employee at a firm who offered you stock options or additional cash as compensation, which would you choose? Why? Would the stock option compensation be, as suggested, getting paid in lottery tickets?
Is there any reason to be surprised that the debt of some major coal companies is in default? What leading accounting-based indicators might there be to have predicted this situation with the debt? Are accounting-based indicators (ratios) all lagging indicators?
If you can buy back stock to save the dividend yield, are you better off if you had to borrow the money to do the buyback? How does the deductibility of interest affect your analysis?
If you were CEO, what options do you now have to improve margins? How long can cost cutting do the trick? How would you determine the point at which cutting costs does more harm than good to grow the firm and improve margins?
If you were in charge of setting the audit fee for a client, what are all the factors you would want to consider? How would you assess the risk of a client, other than considering a weakness in internal controls?
What are some of the disadvantages of debt? What is meant by being too “dependent on increasingly fickle capital markets to alleviate liquidity pressures”? If you were the CFO of one the energy companies, what would you do? How would you try to determine an “optimal capital structure” in this new economic environment?
Passing the CPA exam is obviously doable, but . . . If you are planning on taking it (a good idea!), will you be able to relate to these stories?
Do you think your decisions would be affected and behavior change if you were a CEO that was paid “a lot” in stock options, relative to restricted stock? How? Why? Would it affect your “moral compass”?
If you were a member of the C-suite and you had news (either good or bad) that the market does not expect you to announce on an upcoming 8-K filing, how would you determine if it is “ok” for you to buy or sell your firm’s stock?
What are some of the collateral effects on companies with write-downs? Were these write-downs surprising? Why or why not? What are some of the valuation issues with respect to measuring the impairments?f
If you were targeting a firm in an M&A, how would you assess aggressive accounting practices of the target firm? How could you tell if non-GAAP accounting measures better reflect economic reality, or obfuscate it?
Do you agree that the LCM test under US GAAP is unduly complicated? If so, do you think that the proposed ASU simplifies the accounting? What would be lost, if anything, in the change?
Executives are switching away from options to restricted stock. Why? Is this change in executive compensation a “good” thing for corporate governance? Why or why not?
Does this article make you want to consider an accounting career outside of the Big 4? Why or why not? What skill will you need for the changing roles?
If you were the CFO of Monsanto, what options do you have to try to counter market volatility and its effects on the pension funded status? Which would you choose? Why?
Are accountants introverts? Would they make great entrepreneurs? Why or why not? What are some possible implications for your career choice?
The SEC uses “in-house” administrative judges to handle proceedings that is brings against corporations. Is this a good idea? Why or why not? Is it “fair”?
What are the reasons Newell Rubbermaid wants to buyout pensioners (from their defined benefit plans)? Does this move by Rubbermaid provide information about Rubbermaid’s future? How do you think the stock market reacted to this story?
