Answer the following questions regarding Going South.

1. What were the balance sheet and income statement implications of HealthSouths aggressive revenue recognition tactics? Also, in what specific way did this scheme violate the revenue recognition principle?

2. What are the financial reporting motivations for capitalizing expenditures that should be classified as operating expenses? Please provide additional examples where other companies have used this (or a similar) strategy.

3. In your opinion, why didnt the EY partner more fully investigate the whistleblower e-mail from Michael Vines? How might you have handled the situation differently?