This is the 3 parts.

Financial Accounting. Need a really quality work. Show all work clear and I need the answer attached in a file. No photos. 3 hours and 15 minutes.

Name _________________________ ACC 151 Case 2 Note: In completing all 3 Parts be sure to carefully check grammar, word choice and sentence structure. Also do not merely copy the research. Rephrase in your own words and include references to enable my check of your resources: Contributors' names. Title of resource. URL web address retrieved from Part 1 Accountants of Public companies are required to follow Generally Accepted Accounting Principles (GAAP) in preparing financial statements. Within the United States the Financial Accounting Standard Board (FASB) has primary responsibility for developing accounting principles. As more companies have established global operations the International Accounting Standards Board (IASB) has been developing international standards (although slowly). However, it would be very difficult to compile a complete list of correct vs incorrect transactions (People can be very inventive and transactions can be very complex.) Rather, FASB has defined a dozen or so basic characteristics (assumptions, principles and constraints) of useful information which are to underly GAAP based Financial Statements. Our text has introduced a few of these concepts a more complete list is provided below for your convienence: The Revenue Recognition and Matching principle: Revenue recognized when earned and expenses recognized when obligations are (1) incurred and (2) offset against the revenues generated from those expenses, no matter when the cash is paid out. Cost Principle - Assets recorded at their cost at the time the asset is purchased. Time Period assumption: Life of a business can be divided into time periods and reports can be prepared for the business that cover only those time periods (annually, quarterly, etc.). Economic Entity assumption: Every economic entity can be separately identified and accounted for. Prohibits mix of personal transactions or the transactions of any other person or company. Materiality: Whether the size of an amount makes it likely to influence the decision of an investor/creditor. Conservatism: Requires that Companies choose the accounting method that will be least likely to overstate assets or incomes. Monetary Unit Assumption: Requires that only those events that can be quantified in dollar terms should be included in the accounting records. Going concern assumption: States that the business will remain in operation for the foreseeable future. Full Disclosure Principle: Requires companies to disclose ALL circumstances and events that would make a difference to financial statement users. However even with GAAP the fraud related to the Worldcom Company resulted in the loss of hundreds of millions of dollars in market capitalization. Requirements: Write a approximate 1 page paper and answer the following: 1) Research the internet for articles on the corporation and the events underlying the fraud. Summarize why the company's stock dropped so dramatically as a result of the fraud. Identify some of the assumptions, principles and constraints that were violated Part 2 As a result of unethical business practices and fraud within some of the largest publicly traded companies there was widespread mistrust by investors and American public concern. In 2002, the Securities and Exchange Commission responded by voting to adopt wide spread changes concerning internal controls and financial reporting namely the SOX Act which includes greater accountability and harsher penalties these scandals. Section 302: states that the CEO and CFO are directly reponsible for the accuracy, documentation and submission of all financial reports as well as the internal control structure to the SEC. Section 404: states all annual financial reports must include an Internal Control Report stating that management is responsible for an "adequate" internal control structure, and an assessment by management of the effectiveness of the control structure reporting. SOX also increases the penalties for violations. 1) The OBJECTIVES of Internal Control are: Safeguard assets Process information accurately Ensure compliance with laws and regulations The ELEMENTS of Internal Control are Control Environment Risk Assessment Control Procedures Monitoring Information and Communication The Control Procedures include the following: Competent personnel, rotating duties, mandatory vacations Separating responsibilities Separating operations, custody of assets, and accounting Proofs and security measures Review the following situations for South Oil Services: Situation a. In evaluating the internal control over inventory for the South Oil Services Company, an auditor learns that the warehouse receiving clerk is responsible for ordering parts for supply inventory use in drilling services, counts the inventory when received at the dock, records the receipts into the inventory ledger, and takes the annual inventory, No supervisor reviews the receiving clerk's work. Situation b. Donald Jones handles employee travel and expense reports for South Oil Services. With the growth in the economy, the sales team began traveling extensively gaining new business. Because of the heavy volume, Donald no longer required the sales team to provide original airline, hotel, or car rental receipts. He told them to just keep their meals under the $100 per day per diem and no receipts were required. He allowed them to use their own credit cards so they could get the frequent flyer points. She required them to turn in a summary of the travel expenses quarterly. Situation c. Linda Smith is a Human Resource Manager. Linda follows her own judgments when deciding which: employees are hired and fired, sexual harassment claims pursued, and how ethical infractions should be handled. In fact she hired a number of her relatives and clocks in for her relatives when they miss work. Linda is also responsible for verifying payroll timecards . Linda does not take vacations for fear her actions will be discovered. Requirements: Use the Control Procedures to answer the following 1. Identify the missing internal control PROCEDURE(S) in each situation. 2. Identify each firm's possible problem created by not having the control procedure(s). 3. Propose a solution. Part 3: Ethics in Accounting Consider the following case as an example of ethical dilemmas accounting professionals can face. Dilemmna: Patricia Green CPA is a Blythe Corporation's Controller and she is concerned that the company's net income may be lower this year than was expected. As a result, she is afraid that the Corporate executives may recommend cost reductions by laying off accounting staff. Patricia knows that depreciation is a major expense for Blythe Corporation. The company currently uses the double-declining balance method, and she is thinking of changing to the straight-line method. Alternative 1) However, this change would be highlighted in the statement of retained earnings as a cumulative effect adjustment and management must prove that the new principle will give a reliable and more relevant financial presentation in the statements. Alternative 2) Instead, she is contemplating increasing estimated useful lives and residual values. That would decrease depreciation expense (and increase income). Best of all, this change in estimate will be handled prospectively and would not be highlighted in the current or future years' financial statements. Patricia thinks this approach could save her job and those of her staff. What would you recommend to Patricia Green? On the one hand, it would seem that opting for changes in residual values and useful lives could result in investors and creditors getting less useful information about Blythe's income. On the other hand, Patricia may feel she has an obligation to protect her staff. Requirements: Apply the Guidelines for Ethical Conduct The following questions should help you identify and sort out the questions to be considered in globalization 1. Identify the consequences and its effects on others. Seek answers to the following questions in this sequence: a. What parties (stakeholders) may be harmed or benefited? b. Whose rights or claims may be violated? c. Which specific interests are in conflict?. 2. Consider your obligations and responsibilities to the various stakeholders. What is the effect of each alternative on the various stakeholders? Which stakeholders are harmed or benefited most? 3. Make a decision that is fair and ethical to those affected. It may help to research the internet for articles regarding various thoughts on ethics. Be sure to provide material references for material included in your report. Category Points Description Understandin g 10 Demonstrate a strong grasp of the problem at hand. Demonstrate understanding of how the course concepts apply to the problem. Analysis 20 Apply original thought to solving the business problem. Apply concepts from the course material correctly toward solving the business problem. Execution 10 Total Write your answer clearly and succinctly using strong organization and proper grammar. Use citations correctly. 40 A quality paper will meet or exceed all of the above requirements