1. Securities and Exchange CommissionMany people have argued that the purpose of the SEC is to protect investors. Somebe...
Get help with any kind of assignment - from a high school essay to a PhD dissertation
1. Securities and Exchange Commission
Many people have argued that the purpose of the SEC is to protect investors. Some
believes that the best way to do this by preventing weak companies from issuing
stock. Others say that the SEC should require full disclosure and then let the buyer
beware. Which do you think is more appropriate: a preventive role or disclosure role?
2. GAAP is a Point, Not an Oval
You are the chief financial officer (CFO) of Lorien Company, which is publicly
traded. At the annual shareholdersâ meeting, you have been asked to discuss the
companyâs recent reported results. As part of your presentation, you illustrated the
minimum and maximum values for net income that could have been reported by
Lorien under a range of accounting assumptions used by other companies in your
industry. Your statement prompted a cry of outrage from one of the shareholders
present at the meeting. This shareholder accused you of being an unprincipled liar and
stated that any suggestion that there is range of possible net income values for given
company in a given year indicates an overly liberal approach to financial reporting.
This shareholder has moved that your employment contract be immediately
terminated because of an apparent lack of moral character. The shareholderâs
arguments have been persuasive to a large number of people present at the meeting.
What can you say to defend yourself?
3. Which is more important having a good system of internal controls or hiring
honest employees?
Is an internal control structure necessary? Your uncle doesnât seem to think so. He
works for regional employment staffing service and recently commented, âAs long as
a company hires hardworking, honest people, fraud and abusive financial reporting
cases will be almost nonexistent. People with integrity will always make the right
choice. In the last months, we havenât placed anyone for employment who has been
fired or let go for fraudulent activity!â A friend argues, however, that anyone
presented with the right pressures can commit fraud and the opportunities must be
eliminated through an effective internal control structure. Who do you agree with?
Many people have argued that the purpose of the SEC is to protect investors. Some
believes that the best way to do this by preventing weak companies from issuing
stock. Others say that the SEC should require full disclosure and then let the buyer
beware. Which do you think is more appropriate: a preventive role or disclosure role?
2. GAAP is a Point, Not an Oval
You are the chief financial officer (CFO) of Lorien Company, which is publicly
traded. At the annual shareholdersâ meeting, you have been asked to discuss the
companyâs recent reported results. As part of your presentation, you illustrated the
minimum and maximum values for net income that could have been reported by
Lorien under a range of accounting assumptions used by other companies in your
industry. Your statement prompted a cry of outrage from one of the shareholders
present at the meeting. This shareholder accused you of being an unprincipled liar and
stated that any suggestion that there is range of possible net income values for given
company in a given year indicates an overly liberal approach to financial reporting.
This shareholder has moved that your employment contract be immediately
terminated because of an apparent lack of moral character. The shareholderâs
arguments have been persuasive to a large number of people present at the meeting.
What can you say to defend yourself?
3. Which is more important having a good system of internal controls or hiring
honest employees?
Is an internal control structure necessary? Your uncle doesnât seem to think so. He
works for regional employment staffing service and recently commented, âAs long as
a company hires hardworking, honest people, fraud and abusive financial reporting
cases will be almost nonexistent. People with integrity will always make the right
choice. In the last months, we havenât placed anyone for employment who has been
fired or let go for fraudulent activity!â A friend argues, however, that anyone
presented with the right pressures can commit fraud and the opportunities must be
eliminated through an effective internal control structure. Who do you agree with?
