I need to change the attached to my own words please.

Case #1.4 - Sunbeam - Revenue Recognition Principle 1. Consider the principles, assumptions and constraints of Generally Accepted Accounting Principles (GAAP). Define the revenue recognition principle and explain why it is important to users of financial statements. The revenue recognition principle of GAAP states that revenue must be both earned and realized before it is recognized and is supported by the FASB Statement of Financial Concepts No. 5. For example, in order for revenue to be considered earned at an audit client like Sunbeam, the product must have been delivered to the customer. In addition, the amount of the sale needs to be fixed and determinable. Also, the recognition of revenue is dependent on an assumption that the cash will be collected from the customer in a timely manner. Other points that should be made to students are that the buyer needs to assume the risks and rewards of ownership of the merchandise (i.e., the risk of damage or physical loss). In addition, for certain types of sales (like bill and hold sales), the SEC has established specific and exacting criteria that must be followed in the revenue recognition process. These rules are outlined in the case. 2. Provide one example of how Sunbeam violated the revenue recognition principle in this situation? Please be specific. There are a number of different examples that can be provided by students when answering this question. Thus, the instructor needs to evaluate the merits of each student answer when determining the correctness of this question. One example would be for students to indicate that a number of the different types of special discounts and terms offered to distributors may result in failing to meet a particular criteria required for revenue to be recognized. For example, by contractual agreement, several distributors were provided with terms that allowed them to return to Sunbeam any goods that were not able to be sold. C1.4-1 Case #1.4 - Sunbeam - Revenue Recognition Principle Moreover, the evidence suggests that Sunbeam provided their distributors with far more product than they were actually able to sell to end customers. And, in many cases, Sunbeam assumed all costs related to the return of product to Sunbeam. As such, Sunbeam perpetrated a revenue recognition fraud referred to in many circles as \"channel stuffing\". These sales should not have been recorded as revenue. 3. Consult Paragraphs #28-30 of PCAOB Auditing Standard No. 5. Please identify the most relevant financial statement assertion related to the revenue account at Sunbeam. Why is it the most relevant? Among other matters, paragraphs #28-30 of PCAOB Auditing Standard No. 5 focuses the auditor's attention on the importance of identifying each of the relevant financial statement assertions related to significant accounts and disclosures. Indeed, the identification of relevant assertions is a critical component of the audit of internal control over financial reporting. Specifically, according to Paragraph # 28, \"relevant assertions are those financial statement assertions that have a reasonable possibility of containing a misstatement that would cause the financial statements to be materially misstated.\" In paragraph #30, auditors might \"determine the likely sources of potential misstatements by asking himself or herself \"what could go wrong?\" within a given significant account or disclosure.\" It is clear that certain financial statement assertions are \"more\" relevant than others for a particular set of financial statements. C1.4-2 Case #1.4 - Sunbeam - Revenue Recognition Principle In the present situation at Qwest, one of the relevant financial statement assertions related to the revenue account that is impacted by an IRU swap would be existence or occurrence. The big question related to the IRU swaps is whether the swaps should have been recorded as revenue in accordance with GAAP. Since the facts reveal that Qwest did not have a legitimate business need for the assets that it acquired during the swap transactions, the company appears to have engaged in these swaps to merely generate additional revenue to meet aggressive revenue targets. This is also indicated by the timing of the transactions. The facts of the case reveal that managers would often complete these swap transactions frequently at the close of a quarter in order to meet revenue expectations. 4. As an auditor, what type of evidence would you want to examine to determine whether Sunbeam was inappropriately recording revenue from special discount sales? When auditing the revenue process it is important to obtain sufficient and competent evidence that will allow the auditor to conclude whether the revenue should have been recorded in the accounting period being audited. Among other procedures, here is a sample of the procedures that might be considered to gain comfort over the recording of revenue from special discount sales: C1.4-3 Case #1.4 - Sunbeam - Revenue Recognition Principle Compare the date of original shipping documentation to the reporting period in which the revenue was recorded on the company's books. Inquire about the possibility of any \"side\" agreements between the client and the customers of the client. Examine any contracts or agreements between the client and their customer to determine if any special pricing discounts were agreed upon. Review any Board of Directors meeting minutes to determine if any special pricing discounts and/or programs were in existence. Obtain confirmation of any special pricing discounts from the client's customers for the revenue being recorded that period. 5. Consult Section 301 and Section 204 of SARBOX. Identify one action that the Audit Committee of Sunbeam could have taken to help insure that a revenue recognition fraud would not have occurred? An important tenet of the Sarbanes Oxley Act of 2002 (SOX) is that the investing public has a right to expect that the financial reports they examine contain only credible information. Moreover, according to SOX, the audit committee is required to play an important role to insure that this occurs. According to Section 301 of SOX, the \"audit committee of an issuer shall be directly responsible for the appointment, compensation, and oversight of the work of any registered public accounting firm employed by that issuer.\" Moreover, according to Section 204, the auditing firm must report all \"critical accounting policies and practices\" and \"all alternative treatments of financial information within [GAAP] that have been discussed with management\" as well as the \"ramifications of the use of such alternative disclosures and treatments, and the treatment preferred\" by the auditing firm. Clearly, there is an expectation that the audit committee acts faithfully in an oversight role. C1.4-4 Case #1.4 - Sunbeam - Revenue Recognition Principle At Sunbeam, the audit committee should have taken a proactive role and challenged the assumptions and actions taken by management in recognizing revenue. For example, the audit committee could have obtained a better understanding of the types of transactions that were being recorded as revenue and require management to explicitly document its policies and procedures that were applied to recognize each type of revenue. Then, they could have followed up with tough, specific questions to management and the auditors to ensure that each type of revenue was being recorded in accordance with GAAP. In addition, it is the role of the audit committee to contribute to the development of a strong control environment. It is critical for the operating effectiveness of all controls to have an effective control environment with a \"tone at the top\" that emphasizes the importance of reliable financial reporting. At the very least, the audit committee has the responsibility to acquire a detailed understanding of the accounting policies, procedures, and transactions within the company. Such knowledge would allow for active questioning of management on a regular basis and would reduce the chance of revenue recognition fraud. C1.4-5