ACC 557 Week 1 DQ1
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This 0 page Study Guide was uploaded by an elite notetaker on Wednesday November 11, 2015. The Study Guide belongs to fin571 at Kaplan University taught by in Fall 2015. Since its upload, it has received 21 views.
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Date Created: 11/11/15
ACC 557 Week 1 DQl quotImproper or Illegal Methods Please respond to the following From the eActivity identify the company the accounting impropriety or illegality how it was detected the outcome and propose a strategy that might have prevented the situation Indicate how the strategy should be implemented Assess the impact to the company s financial performance based on the impropriety and the resulting effect to stakeholder confidence in management recommending how the company can minimize the resulting impact to the business The name of the company is Beazer Homes USA The US Securities and Exchange Commission SEC found them guilty of manipulating its earnings by hiding money in certain accounts Caulfield 2008 The SEC found discrepancies in its quarterly and annual earnings on statements from 2000 to 2007 The company created reserves for land inventory and construction costs that resulted in the company being able to manipulate earnings that they were to report to the shareholders They fraudulently misstated their net income The SEC found them guilty Beazer never acknowledged their guilt However the company cooperated with the investigation implemented new controls over its practices from the accounting standpoint to ensure it does not happen again and they also filed adjusted financial statements for 1998 through the second quarter of 2007 to properly identify the company s earnings and losses I would propose that they should implement internal quality control checks of the books as well as hire external auditors to verify the financial statements This would ensure that there are not only internal eyes on the documents but also external reviews as well The company understated its net income over a five year period by 42 million dollars Then in 2006 they overstated their net income by more than 12 million dollars This process continued into the beginning of 2007 By doing this they were smoothing over peaks and valleys so that they could meet their analysts and stakeholders expectations However as a result of the deception the stakeholders and customers lost faith in the builder This damaged their reputation and they lost ground with their competitors They have taken steps to minimize the damage by correcting the issues and publishing valid financial reports Communication is the key to overcoming this set back Caulfield J 2008 September 25 Beazer settles with sec over accounting improprieties Builder Retrieved from httpwwwbuilderonlinecomlegalissuesbeazersettleswithsecover accountingimproprietiesas
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