Question 1: PEOPLE INVOLVED IN FINANCIAL ACCOUNTING (25 Marks) Bedford Road Productions Co. (BRP) is a North Scotia media company that has begun to be noticed nationwide, in Central and Eastern Africa. The Company's business model involves buying media space, especially on TV and in magazines, for various customers, and has its own design and production staff so that it simultaneously suggest ads to customers and media outlets and then go on to produce some ads itself. However, the company is recognized for its disrespectful humour and crazy approach to advertising, as well as for its ability to create ad placements that have a strong impact on customers' sales and reputation. Here are some of the people involved in BRP business: - Kathy Barsnable, one of the two original founders of BRP and now the company's president as well as a main shareholder, is very ambitious for the company and wants to see it become a real international player, with expanded production facilities that would allow it to begin producing TV shows, special events, and even small movies. She is insistent that the company show growth and success in all its ventures. - Greg Thom is the other original founder and is now the company's chief financial officer. Using some family money, Greg provided the company's initial financing, and he is still the company's largest shareholder, though he owns less than half the shares and so does not control the company. He also is a creditor, having provided some of the financing in loans as well as in shares. Greg is in favour of slow, careful growth, and often disagrees with Kathy's grander plans, but he and Kathy have a lot of respect for each other and work well together most of the time. Greg would be happy if others largely ran BRP, so that he could focus more on family investments and some other ventures he would like to start. - Brent Siddhu is the company's production head. Brent, who owns some shares of the company but less than Kathy or Greg, has been pushing for expansion into TV production. He is very bright and good with people, but is bored with the media placement business that is still the foundation of BRP's success. Brent likes to travel to Cape Angulus, and rumour has it that he would leave if a more creative opportunity arose. - Hendrick Argot owns one of BRP's major customers, a much bigger company than BRP. Hendrick has been very supportive of BRP's efforts and, in addition to being a good customer, has often suggested to Kathy and Greg that he would like to buy into BRP, maybe even buy control and wrap BRP into his own media operations. Kathy used to work for Hendrick, leaving to start BRP with Greg, and although she gets along very well with Hendrick, she wants to run her own business. - Susan Dohn is a partner in the public accounting firm that is BRP's external auditor. In addition to doing the auditing, Susan provides tax and financial advice to Kathy and Greg. BRP is one of her main clients, which she has seen grow from its small beginnings, and she was promoted to partner partly because of her success in serving BRP. There have been some controversies over some of BRP's accounting methods, which have tended to show higher income than Susan was comfortable with, but she has managed to smooth out the problems, convincing Kathy to agree to some less optimistic accounting. Kathy has agreed but still, were Greg not there to add his more cautious views; Susan might have had more difficulty retaining BRP as a client. - Clarice Xiao is the Nova Scotia loans manager for a big Canadian bank. Clarice has also been involved with BRP for several years, approving steadily increasing bank financing as the company grew. She is rewarded by the bank for growth in her loans portfolio, but also is penalized if loans go bad, so she is interested in helping to further the company's ambitions as long as they are supported by solid business plans, including strong cash flow from which loans' interest can be met and principal repaid on schedule. Clarice, following standard bank procedure, has required that, as long as the bank has significant loans to BRP, the main shareholders must agree not to sell their shares to each other or anyone else without the bank's permission. Required: Discuss the different points of view these people have of BRP and their likely different interests
