The Generally Accepted Accounting Principles (GAAP) also play a major role in the solving of the issues at hand (Epstein and Nach 77). The case involving Philadelphia Communications Inc. first of all presents the issue of disclosures before, during and after an Initial Public Offer. Since Philly had just recently completed an IPO, the SEC, FASB and IFRS requirements require certain disclosures concerning this process. Another issue arising out of Philly’s case is the testing and verification of receivables to the company. These too require certain considerations under the SEC, FASB and IFRS provisions. Revenue recognition needs to receive keen focus at this stage. The fact that the receivable support provided by the client does not specify interest or payment terms for the notes receivable from several of the company’s chief executive officer’s cousins is another issue of great concern. The bodies stated above, namely the SEC, FASB and the IFRS have provisions and requirements for these kinds of transactions and thus need to be followed (Shamrock 11). The family members, being considered related parties, need to have more disclosures besides those stated above. The family, though only actively represented by Mr. Sigar in his position as the company’s chief executive and chairman, still owns a large part of the company hence the need to put into consideration its role in the firm’s operations. The fact that there is dependence on records from another party from the previous year presents another issue to be put into consideration. The Generally Accepted Accounting Principles play a serious role in this area; enabling the auditor draw clear conclusions from the information available. Options and Solutions to the Issues a. Initial Public Offer Philadelphia Communications Inc. became a public company through the Initial Public Offer. The Securities and Exchange Commission, upon receiving an application from any company willing to go public, compels the company to apply all accounting standards to which the company subscribes (Epstein and Nach 55). These include the IFRS requirements, among others. The information disseminated in this period includes the share of the company owned by the individual participants. This serves to ensure there is transparency and accountability. The information from Philly’s IPO doesn’t state the ownership in terms of the number of shares owned. This type of non-disclosure is against the SEC and GAAP requirements and should be adhered to. b. Receivables The other issue involves receivables and in this particular case from shareholders. This basically is the money received from shareholders in their purchase of a company’s shares. It is an investment into the company hence keenness is required in handling this issue. The SEC provisions and GAAP in place concerning receivables from shareholders are that the shareholder should be in the know concerning the type of shares purchased and their amount. The notes receivable from Mr. Sigar’s cousins should have clearly stated interest rates and payment terms. This applies to all other shareholders’ notes (Shamrock 23). For transparency’s sake, interest rates and payment terms on all notes receivable should be stated beforehand. According to the Financial Accounting Standards Board, the risk level to which shareholder’s receivables are exposed to should also be known by the
Name Professor Course Date FINANCIAL REPORT Accounting Issues Central to the Case Philadelphia Communications Inc.’s case is quite clear in the way it exists. From the information provided both by the prior year’s records and Mr. Sigar, several deductions can be drawn and expounded upon with an aim at their solutions…
At the same time, the Securities and Exchange Commission (SEC) issued new additional disclosure requirements; and the Financial Accounting Standards Board(FASB) went to the extent issuing an exposure draft (ED) proposing to eliminate the criterion to account for Repo 105 transactions as sales.
This shall provide an overview of the type of business ownership they will opt for, the kind of accounting information system they will select, the set of individuals for whom their financial statements shall be important and lastly the constraints to which they will be subjected to in case of financial reporting.
The company has reported an increase in its annual profits from 2005 to 2007 yet it has had cash flow problems which has made the company to lack sufficient cash to pay for its obligations within the deadline. Investors are usually concerned with the overall strength of a company including the cash flows and profitability before they get to invest in the company and that is why companies should ensure positive cash flows.
Further on, changes in profile and profitability ratios are explained with the help of the information found in notes to financial statements, statement of accounting policies, board members' reports, corporate governance issues, and press releases, one by one.
This is done by case studies, interviews, focus groups, and literature review, the latter being a form of secondary research. Primary search in the form of live case studies, interviews and focus groups are redundant now as there is considerable literature already available for the proposed study.
On October 16, 2001, Enron Corporation of Houston, Texas, one of the largest corporations in the world, announced it was reducing its after-tax net income by $544 million and its shareholders' equity by $1.2 billion.1 On November 8, it announced that, because of accounting errors, it was restating its previously reported net income for the years 1997-2000.
Strategic management guidelines have been developed with regard to analyzing and writing up case studies. The goal of a case study analysis is to determine the value of a company as expressed through its choices of strategy and structure. A case analysis of a company it is critical that it be systematic (Hill and Jones C1).
everely hit the global economy, prompting the International Accounting Standards Board (IASB) to reconsider its accounting framework towards the International Financial Reporting Standard (IFRS) 7: Financial Instrument. At the same time, the Securities and Exchange Commission
In order to sustain its competitive edge through interactions with its stakeholders, every firm must come up with strategies for balancing profiteering motives with the welfare of stakeholders. For instance, an organisation must be able to
nd of accounting information system they will select, the set of individuals for whom their financial statements shall be important and lastly the constraints to which they will be subjected to in case of financial reporting.
The different forms of business are sole
3 pages (750 words)Case Study
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