Shaun Hoggan

Article Analysis of Situations That May Lead to Unethical Practices

Shaun Hoggan

September 14, 2007

Financial Accounting II/ACC/363

          In the article “New wave of accountants returns to roots” found in the September 30^th, 2005 edition of the Central New York Business Journal, the author indicates shifts in accounting priorities which will change the demand of future accounting requirements.  Although the article does not mention Sarbanes-Oxley legislation which was passed in July of 2002, it does imply the new demand is caused as a result of the legislation.  The first bullet point in the recently changed demand is for corporate CFOs requirement to meet compliance deadlines which would have been imposed by Sarbanes-Oxley legislation.  This paper will discuss how not complying with Sarbanes-Oxley legislation will lead to unethical practices by corporations and the indicators showing where the shortages in the corporate know how are and how they are being resolved. 

            The Central New York Business Journal article implies that several existing and new skills are needed as a result of this required compliance.  Among those skills and aptitudes needed are: 

• Basic accounting skills
• Internal Controls
• Business-Continuity Planning
• Anti-fraud measures
• Mergers and Acquisitions

The article also suggests opportunities are expanding in the future for consulting roles at large public-accounting firms and independent consultancies.  The article says:

“Technological proficiency will remain a critical skill for next-generation accountants.  Valued areas of expertise include systems documentation, flowcharting, and data warehousing, as well as knowledge of database management and enterprise planning systems”(New wave of accountants returns to roots, 2005)

Corporations do not currently have what it takes to be compliant with Sarbanes-Oxley and they are struggling to find people who can assist in speeding the finish line to compliance.  When the article indicates that “Technological proficiency” is critical this may mean two things.  First, corporations have had a sudden increase in technology changes which have been adopted by the technological savvy.  These people who are the early adopters of technology are not always known for their business savvy practices.  This has caused a dichotomy of segments in the business world which do not know how to relate or communicate with each other.  So the Technological proficient is likely a requirement needed to communicate the business activity which is becoming more dependent on technology to translate into business terms which are pertinent to financial reporting.

            The second reason technical proficiency may be critical is likely from the requirement of today’s corporation to grow on an ongoing basis.  Technology has made significant strides in streamlining data and making arduous tasks more efficient which in turn requires less overhead.  As employment, and wages increase, along with the requirement to report pensions during the employees’ tenure importance lies with becoming increasingly more efficient with as little headcount as possible.  The days of expensing pensions the months they are required to be paid out are gone as the baby boomers are beginning to retire and corporate liabilities for these workers are mounting on the financials.  These liabilities will certainly have an impact on corporate financials for several decades ahead. 

            By not complying with Sarbanes-Oxley certain detrimental effects will automatically occur.  Non technical business workers, if allowed to continue without bridging the technical divide will not have a clear picture of the business effects technology is having on the corporation.  Sarbanes-Oxley requires these corporations to bridge this divide and understand the full implications clearly representing the impact technology has on the business. 

References

New wave of accountants returns to roots. (2005, September 30). Business Journal (Central New York), 19(39), 24-25.

Week 2 Assignment
Monday, Day 7: Learning Team – Prepare a solution to the following problem from the text: Chapter 10: # P10-3A.

Week 2 Discussion
Learning Teams: Begin working on the assignment, Ratio Analysis Memo and Presentation, which is due in Week Five. Your solutions should be submitted to the Assignments Forum on Thursday, Day 3, of Week 5.

1)    Use the Virtual Organization link on the page to access the Virtual Organizations. Select one of the Virtual Organizations as the basis for this assignment. Be sure to obtain instructor approval of your selected organization before beginning this assignment.

2)    Use the information contained in your selected organization’s balance sheet and income statement to calculate the following ratios:

a)    Liquidity ratios
i)     Current ratio
ii)    Acid-test (quick) ratio
iii)   Receivables turnover
iv)   Inventory turnover

b)    Profitability ratios
i)     Asset turnover
ii)    Profit margin
iii)   Return on assets
iv)   Return on common stockholders’ equity

c)    Solvency ratios
i)     Debt to total assets
ii)    Times interest earned

3)    Be sure to show your calculations for each ratio.
4)    Then, prepare a horizontal and vertical analysis for the balance sheet and the income statement.
5)    Prepare a 350-750-word memo to the CEO of your selected organization in which you discuss your findings from your ratio calculations and your horizontal and vertical analysis. In your memo, address the following items:

a)    Discuss what the liquidity, profitability, and solvency ratios tell you about the financial position of the company
b)    Identify which users would be interested in each type of ratio.
c)    Explain what the collected data tells you about the performance and position of the company.

6)    Prepare 8 – 10 Microsoft® Power Point® slides with speaker notes illustrating your financial analysis of your selected organization.
7)    Be sure to properly cite the source(s) of the data that you used to calculate your ratios and the horizontal and vertical analysis in your paper. If you used an electronic source, include the URL. If you used a printed source, please attach a copy of the data to your paper.

Week 3 Assignment
Monday, Day 7: Learning Team – Prepare a solution to the following problem from the text: Chapter 10: # P10-3A.

Week 3 Discussion
Learning Teams: Corporate Characteristics Proposal – Due in Week #4

Your team has been hired as consultants for a start-up business venture. As part of your analysis of this new business venture, prepare a 1,050-1,750-word proposal to the CEO in which you discuss the following items:

1.    Describe the different forms of business organizations that could be selected as the basis for the business.
2.    The characteristics of a corporation.
3.    The different types of stocks and corresponding characteristics, which a corporation could issue.
4.    The advantages and disadvantages to the corporate form of doing business.

Be sure to properly cite any references used in your paper.

Week 4 Assignment
Monday, Day 7: Learning Team – Corporate Characteristics Proposal.

Week 4 Discussion
None in Syllabus

Week 5 Assignment
Thursday, Day 3: Learning Team – Submit the team solution to the Ratio Analysis Memo and Presentation and Learning Team Peer Evaluation.

Week 5 Discussion
None in Syllabus