http://www.google.com/hostednews/ap/article/ALeqM5j-udzGtmQ4ocJMxezvpnBuGcFCswD975CNBG1
Summary: The Broadway theatre company is known worldwide for their hit shows (Such as "Ragtime" and "Show Boat"). Unfortunately, two co-founders of one company (Livent) had harmed its reputation. The two accountants, Garth Drabinsky and Myron Gottlieb, have been doing the accounting and production of financial statements for this company for years. The thing was, they were committing fraud every time they produced financial statements. They had been overstating their business finances by millions of dollars, all this done within a period of several years. The two were charged with two counts of fraud and one count of forgery and could be sentenced to 14 years in prison. Authorities say that the fraud helped build over $100 million in shareholder value. This was lost though, when the fraud was revealed by a New Managment Team.
Connections: This article is connected to the Accounting 1 Fifth Edition textbook that we have, in the way that it relates with the Generally Accepted Accounting Principles, Concepts, and Conventions. There are a total of eleven GAAP's in the back of our textbook, and I believe this article to be defiant of mainly three of them. The first principle it disregards is the Objectivity Principle. This states that the accounting will be recorded on the basis of objective evidence, and will not be based on personal feelings, but on facts. The second GAAP that it doesn’t fulfill is the Materiality Principle. This states that accountants must use the GAAP's unless it is expensive or too difficult (For Livent it was neither). Finally, the Principle of Conservatism is not being used as it states that: The accounting for a business should be fair and reasonable (Which the accounting of this company obviously isn’t).
Reflection: I am baffled by the fact that a company that seemed to have a good reputation and had good shareholder value was committing fraud for several years. They had a good potential company going for them before they started the fraud, but they threw it all away as soon as they started adding additional millions of dollars on their financial statements. I personally am not a big fan of the kind of shows that this company creates, but i can imagine the thousands (maybe even millions) of fans that this company had, that are now crushed by the fact that one of their favourite entertainment companies has been screwing everyone over for years.
Monday, April 6, 2009
Wednesday, March 11, 2009
Chapter 16 Blog
http://www.forbes.com/feeds/ap/2009/03/11/ap6156175.html
Summary: The recent recession has hurt many businesses, and sacrifices are having to be made in order to keep these businesses operational. My article is on a Television company called "Belo", this company was one of the many hit by the powerful storm of the recession. Belo had to cut 150 jobs and decrease salaries. The cutting back of salaries started in Dallas where it only affected employees working there. Unfortunately, the news that the salaries of all employees will soon be chopped down was announced March 11th. Belo, which owns over 20 Television Stations, also reported that the cutbacks in wages will take place in mid April.
Connections: This article is connected with Chapter 16 in the way that it deals with "Salaries". Chapter 16 states that a salary is a fixed sum of money paid to an employee on a regular basis over a period of time. My article deals with a company called Belo, which had to decrease that salary by 5%. This can be a big deal as it could make thousands of dollars of loss in the salaries of their employees. In chapter 16 it is said that salaries can be decreased if the employee isn't up to standards for what they are getting paid. Unfortunately in this case, even if the employee was excellent they still have to take a salary cut.
Reflection: I think that this sacrifice for the company had to be done, but it could have been done in a way so that salaries of good employees were unharmed. Like many other businesses have done recently, Belo could have cut jobs of their more inexperienced and less than decent workers in order to save money, while keeping their excellent employees happy by maintaining their salaries. I believe that because they dropped salaries, many of Belo's employee's will quit (even the very good ones) and Belo will end up having the same effect as they could have had if they had just cut more jobs in the beginning, except they will have lost many of their high performance employees.
Summary: The recent recession has hurt many businesses, and sacrifices are having to be made in order to keep these businesses operational. My article is on a Television company called "Belo", this company was one of the many hit by the powerful storm of the recession. Belo had to cut 150 jobs and decrease salaries. The cutting back of salaries started in Dallas where it only affected employees working there. Unfortunately, the news that the salaries of all employees will soon be chopped down was announced March 11th. Belo, which owns over 20 Television Stations, also reported that the cutbacks in wages will take place in mid April.
Connections: This article is connected with Chapter 16 in the way that it deals with "Salaries". Chapter 16 states that a salary is a fixed sum of money paid to an employee on a regular basis over a period of time. My article deals with a company called Belo, which had to decrease that salary by 5%. This can be a big deal as it could make thousands of dollars of loss in the salaries of their employees. In chapter 16 it is said that salaries can be decreased if the employee isn't up to standards for what they are getting paid. Unfortunately in this case, even if the employee was excellent they still have to take a salary cut.
Reflection: I think that this sacrifice for the company had to be done, but it could have been done in a way so that salaries of good employees were unharmed. Like many other businesses have done recently, Belo could have cut jobs of their more inexperienced and less than decent workers in order to save money, while keeping their excellent employees happy by maintaining their salaries. I believe that because they dropped salaries, many of Belo's employee's will quit (even the very good ones) and Belo will end up having the same effect as they could have had if they had just cut more jobs in the beginning, except they will have lost many of their high performance employees.
Wednesday, February 18, 2009
Chapter 15 Blog
http://www.finance-commerce.com/article.cfm?recID=10038
Summary: Because of the economic recession stores and businesses have been suffering from poor sales. This article reveals the percentage decline in retail stores in North America. Last month in January, sales of retail stores dropped 1.6%. This was not as bad as expected but still increased a monthly sales slump to a consecutive four months. Luxury stores suffered from even greater hardship, as their sales went down 11.4%. January is the least important month of retail stores, but the percentages show how weak consumer spending is. Merchants couldn’t even rely on a boost from gift cards, mainly because customers were looking for sales or just not buying at all. People are concerned about home prices, tight credit, and more, but their biggest worry is job security and income. The unemployment rate is currently at 7.2%, but expected to be driven up to 7.5% when the government releases new figures. This would be the highest unemployment rate in 17 years.
Connections: My article is connected to Chapter 15 as a result of comparing sales from different time periods. The article shows how sales have dropped either lightly, or heavily, due to our recent recession. In chapter 15 "Analyzing Financial Statements" there is a comparison of financial data. The article compares the sales in January of 2009. This month is compared financially with the sales from last year and reveals the differences in percentages. Section 15.2 from Chapter 15 focuses more in depth of comparing sales and profits, which is similar to what this article does by comparing the decline in sales from last year, to this year January.
Reflection: I believe that these percentages are accurate, and will continue to descend as long as the major recession is in process. I do not find it surprising that Businesses are making fewer sales because now is a tough time for many of their customers. There is bills that must be paid, items that need to be purchased, and money that has to be made. It would be especially difficult if you are unemployed, or have recently been fired. Companies aren't generating their fulfilled sales, so they will fire or temporarily lay off workers, which makes this an extremely stressful time for everyone caught in the recession’s path.
Summary: Because of the economic recession stores and businesses have been suffering from poor sales. This article reveals the percentage decline in retail stores in North America. Last month in January, sales of retail stores dropped 1.6%. This was not as bad as expected but still increased a monthly sales slump to a consecutive four months. Luxury stores suffered from even greater hardship, as their sales went down 11.4%. January is the least important month of retail stores, but the percentages show how weak consumer spending is. Merchants couldn’t even rely on a boost from gift cards, mainly because customers were looking for sales or just not buying at all. People are concerned about home prices, tight credit, and more, but their biggest worry is job security and income. The unemployment rate is currently at 7.2%, but expected to be driven up to 7.5% when the government releases new figures. This would be the highest unemployment rate in 17 years.
Connections: My article is connected to Chapter 15 as a result of comparing sales from different time periods. The article shows how sales have dropped either lightly, or heavily, due to our recent recession. In chapter 15 "Analyzing Financial Statements" there is a comparison of financial data. The article compares the sales in January of 2009. This month is compared financially with the sales from last year and reveals the differences in percentages. Section 15.2 from Chapter 15 focuses more in depth of comparing sales and profits, which is similar to what this article does by comparing the decline in sales from last year, to this year January.
Reflection: I believe that these percentages are accurate, and will continue to descend as long as the major recession is in process. I do not find it surprising that Businesses are making fewer sales because now is a tough time for many of their customers. There is bills that must be paid, items that need to be purchased, and money that has to be made. It would be especially difficult if you are unemployed, or have recently been fired. Companies aren't generating their fulfilled sales, so they will fire or temporarily lay off workers, which makes this an extremely stressful time for everyone caught in the recession’s path.
Subscribe to:
Posts (Atom)