Non-GAAP financial measures are disclosed by companies to provide information to investors and other stakeholders beyond what is required by traditional GAAP-based financial statements. Although these voluntary non-GAAP measures may provide useful information for decision-making, their limited regulation and standardization may mislead investors. This case exposes students to several aspects of non-GAAP measures. First, students will be able to locate, compare, and analyze differences in GAAP and non-GAAP measures in various disclosure mediums and subsequently describe the benefits and disadvantages in different contexts. Next, using EDGAR, students will be able to locate and discuss specific issues regulators have taken with these disclosures by analyzing SEC comment letters. Finally, students will be able to compare the usefulness of GAAP and non-GAAP measures using the FASB conceptual framework. Overall, this case provides students with an increased understanding of how companies use differential financial disclosures in the broader financial reporting environment.
{"title":"Beyond GAAP: A Case Study Analyzing Non-GAAP Financial Measures and SEC Comment Letters through the Lens of the FASB Conceptual Framework","authors":"Kevin Hale, Rebecca J Wetmiller","doi":"10.2308/issues-2023-039","DOIUrl":"https://doi.org/10.2308/issues-2023-039","url":null,"abstract":"\u0000 Non-GAAP financial measures are disclosed by companies to provide information to investors and other stakeholders beyond what is required by traditional GAAP-based financial statements. Although these voluntary non-GAAP measures may provide useful information for decision-making, their limited regulation and standardization may mislead investors. This case exposes students to several aspects of non-GAAP measures. First, students will be able to locate, compare, and analyze differences in GAAP and non-GAAP measures in various disclosure mediums and subsequently describe the benefits and disadvantages in different contexts. Next, using EDGAR, students will be able to locate and discuss specific issues regulators have taken with these disclosures by analyzing SEC comment letters. Finally, students will be able to compare the usefulness of GAAP and non-GAAP measures using the FASB conceptual framework. Overall, this case provides students with an increased understanding of how companies use differential financial disclosures in the broader financial reporting environment.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":" 5","pages":""},"PeriodicalIF":0.9,"publicationDate":"2024-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139391646","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Magnum Hunter Resources Corporation (MHRC) was an oil and gas company headquartered near Dallas, TX. Although the company grew rapidly through acquisitions, the accounting department did not keep pace with the company’s growing size and sophistication. Management identified this as an internal control deficiency (ICD) prior to issuing the 2011 financial statements but did not disclose it because management underestimated its severity. The company later disclosed multiple material weaknesses when it restated its financial statements. This case study is designed for use in the undergraduate or graduate audit classroom to examine the classification and disclosure requirements for ICDs. After completing this case study, students will be able to apply professional standards to classify ICDs; critique the decision-making process of management, consultants, and auditors tasked with evaluating ICDs; and consider the impact of material weakness disclosure on investors. JEL Classifications: M41; M42.
{"title":"Classifying Internal Control Deficiencies: The Case of Magnum Hunter Resources Corporation","authors":"Anthony C. Bucaro, J. D. Keyser","doi":"10.2308/issues-2022-073","DOIUrl":"https://doi.org/10.2308/issues-2022-073","url":null,"abstract":"\u0000 Magnum Hunter Resources Corporation (MHRC) was an oil and gas company headquartered near Dallas, TX. Although the company grew rapidly through acquisitions, the accounting department did not keep pace with the company’s growing size and sophistication. Management identified this as an internal control deficiency (ICD) prior to issuing the 2011 financial statements but did not disclose it because management underestimated its severity. The company later disclosed multiple material weaknesses when it restated its financial statements. This case study is designed for use in the undergraduate or graduate audit classroom to examine the classification and disclosure requirements for ICDs. After completing this case study, students will be able to apply professional standards to classify ICDs; critique the decision-making process of management, consultants, and auditors tasked with evaluating ICDs; and consider the impact of material weakness disclosure on investors.\u0000 JEL Classifications: M41; M42.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"57 4","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138993881","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using the Securities and Exchange Commission’s Accounting and Auditing Enforcement Releases, this assignment builds critical thinking and ethical decision-making skills in a financial accounting setting. It requires students to analyze a real-world fraud from the perspective of an employee, manager, or executive (a “case participant”) involved in the accounting impropriety. The case features individual and group components that may be customized to fit the instructor’s needs. The individual component examines a case participant’s choices in committing accounting improprieties using an ethical decision-making framework. The group component includes an analysis of the accounting, the fraud triangle, possible preventative measures, and takeaways applicable to students’ future careers. By requiring students to step into the shoes of a case participant, this assignment increases student awareness of deliberate choices leading to financial reporting fraud and equips students with an ethical decision-making framework should they encounter a financial reporting ethical conflict in the workplace.
{"title":"Using AAERs in Financial Accounting Courses: A Case Study to Integrate Ethical and Technical Competencies","authors":"Barry Hettler, Jennifer Sustersic Stevens","doi":"10.2308/issues-2022-050","DOIUrl":"https://doi.org/10.2308/issues-2022-050","url":null,"abstract":"\u0000 Using the Securities and Exchange Commission’s Accounting and Auditing Enforcement Releases, this assignment builds critical thinking and ethical decision-making skills in a financial accounting setting. It requires students to analyze a real-world fraud from the perspective of an employee, manager, or executive (a “case participant”) involved in the accounting impropriety. The case features individual and group components that may be customized to fit the instructor’s needs. The individual component examines a case participant’s choices in committing accounting improprieties using an ethical decision-making framework. The group component includes an analysis of the accounting, the fraud triangle, possible preventative measures, and takeaways applicable to students’ future careers. By requiring students to step into the shoes of a case participant, this assignment increases student awareness of deliberate choices leading to financial reporting fraud and equips students with an ethical decision-making framework should they encounter a financial reporting ethical conflict in the workplace.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"260 ","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139016291","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Gary M. Fleischman, Derek K. Oler, Christopher J. Skousen
We offer advice to accounting faculty who have a growing level of seniority at their schools. Seniority is accompanied by increasing autonomy, and we encourage senior faculty to use that autonomy to focus their efforts on building up others. We offer recommendations on how to use seniority to positively impact one’s department and college by practicing the tenants of servant leadership, and we discuss how this can be accomplished by examining the three facets of a faculty member’s job description: research, service, and teaching. Our overarching goal is to encourage senior faculty to help address current challenges in both academia and practice as well as chart a future course that colleagues can follow that will strengthen the role of accounting to better serve society.
{"title":"Advice for Senior Faculty: Supporting and Building Your School","authors":"Gary M. Fleischman, Derek K. Oler, Christopher J. Skousen","doi":"10.2308/issues-2023-029","DOIUrl":"https://doi.org/10.2308/issues-2023-029","url":null,"abstract":"We offer advice to accounting faculty who have a growing level of seniority at their schools. Seniority is accompanied by increasing autonomy, and we encourage senior faculty to use that autonomy to focus their efforts on building up others. We offer recommendations on how to use seniority to positively impact one’s department and college by practicing the tenants of servant leadership, and we discuss how this can be accomplished by examining the three facets of a faculty member’s job description: research, service, and teaching. Our overarching goal is to encourage senior faculty to help address current challenges in both academia and practice as well as chart a future course that colleagues can follow that will strengthen the role of accounting to better serve society.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"41 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139305183","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-26DOI: 10.2308/0739-3172-38.4.e
{"title":"Editorial Policy and Style Information","authors":"","doi":"10.2308/0739-3172-38.4.e","DOIUrl":"https://doi.org/10.2308/0739-3172-38.4.e","url":null,"abstract":"","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"30 12","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134906898","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2023-10-26DOI: 10.2308/0739-3172-38.4.i
{"title":"Covers and Front Matter","authors":"","doi":"10.2308/0739-3172-38.4.i","DOIUrl":"https://doi.org/10.2308/0739-3172-38.4.i","url":null,"abstract":"","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"36 4","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134906899","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT This real-world case demonstrates attempts by PPG’s controller to manage non-GAAP earnings to meet or beat the consensus analyst estimates. The case provides information regarding improper accounting adjustments made by PPG. In completing the case requirements, students decipher whether PPG used non-GAAP earnings to inform or obfuscate, determine whether certain accounting adjustments violated generally accepted accounting principles, compute the effect of accounting adjustments on non-GAAP and GAAP earnings, examine its materiality, and understand the likely motivations of the controller for recording accounting adjustments. The case also demonstrates the effect of classification shifting as a tool for managing non-GAAP earnings and exposes students to the importance of meeting or beating analyst estimates. It is appropriate for intermediate accounting and professional accounting research courses. JEL Classifications: M41.
{"title":"A Penny Here, a Penny There: A Case of Managing Non-GAAP Earnings at PPG Industries","authors":"Mahendra Gujarathi, Mark Kohlbeck","doi":"10.2308/issues-2022-011","DOIUrl":"https://doi.org/10.2308/issues-2022-011","url":null,"abstract":"ABSTRACT This real-world case demonstrates attempts by PPG’s controller to manage non-GAAP earnings to meet or beat the consensus analyst estimates. The case provides information regarding improper accounting adjustments made by PPG. In completing the case requirements, students decipher whether PPG used non-GAAP earnings to inform or obfuscate, determine whether certain accounting adjustments violated generally accepted accounting principles, compute the effect of accounting adjustments on non-GAAP and GAAP earnings, examine its materiality, and understand the likely motivations of the controller for recording accounting adjustments. The case also demonstrates the effect of classification shifting as a tool for managing non-GAAP earnings and exposes students to the importance of meeting or beating analyst estimates. It is appropriate for intermediate accounting and professional accounting research courses. JEL Classifications: M41.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134906900","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Valerie Simmons, Amanda Serafin, Ashley Stampone, Linette A. Rayeski
ABSTRACT This study examines the current state of environmental, social, and governance (ESG) accounting education in university settings. We survey 452 accounting faculty to better understand how, when, and where ESG components are being integrated into the accounting curriculum, the current state of ESG integration, and implementation challenges. We find that few accounting departments have formally integrated ESG components into the accounting curriculum, although numerous faculty members have taught ESG topics through their own initiative. Results show that many accounting educators recognize the need for ESG instruction but lack the necessary resources and support. Survey findings reveal faculty perspectives regarding where and how ESG should be taught, implementation strategies, possible challenges, and resources needed. We provide an overview of the current ESG reporting environment, the position of the Association to Advance Collegiate Schools of Business, the status of the Uniform CPA Exam, and current ESG instructional resources.
{"title":"Integrating ESG into the Accounting Curriculum: Insights from Accounting Educators","authors":"Valerie Simmons, Amanda Serafin, Ashley Stampone, Linette A. Rayeski","doi":"10.2308/issues-2022-080","DOIUrl":"https://doi.org/10.2308/issues-2022-080","url":null,"abstract":"ABSTRACT This study examines the current state of environmental, social, and governance (ESG) accounting education in university settings. We survey 452 accounting faculty to better understand how, when, and where ESG components are being integrated into the accounting curriculum, the current state of ESG integration, and implementation challenges. We find that few accounting departments have formally integrated ESG components into the accounting curriculum, although numerous faculty members have taught ESG topics through their own initiative. Results show that many accounting educators recognize the need for ESG instruction but lack the necessary resources and support. Survey findings reveal faculty perspectives regarding where and how ESG should be taught, implementation strategies, possible challenges, and resources needed. We provide an overview of the current ESG reporting environment, the position of the Association to Advance Collegiate Schools of Business, the status of the Uniform CPA Exam, and current ESG instructional resources.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"42 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135963436","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT In September 2016, the Consumer Financial Protection Bureau (CFPB) announced an enforcement action against Wells Fargo related to improper sales practices. Following investigations revealing widespread abuse by thousands of employees (e.g., opening deposit and credit accounts without customer consent), Wells Fargo paid civil monetary penalties of $185 million and other substantial punitive fees and fines. This case study uses this real-world example to explore the influence of materiality on the scope of an audit, the auditor’s responsibility for detection and communication of noncompliance with laws and regulations (NOCLAR), and the auditor’s consideration of the control environment in the evaluation of internal controls over financial reporting (ICFR). After completing the case, learners are able to discuss relevant professional standards and recognize the impact of materiality considerations on decisions about financial statement misstatements, NOCLAR, and internal control deficiencies. JEL Classifications: M41; M42.
{"title":"The Auditor’s Responsibility for Noncompliance with Laws and Regulations: A Case of Unauthorized Account Activity at Wells Fargo","authors":"John D. Keyser, Jason L. Smith","doi":"10.2308/issues-2022-052","DOIUrl":"https://doi.org/10.2308/issues-2022-052","url":null,"abstract":"ABSTRACT In September 2016, the Consumer Financial Protection Bureau (CFPB) announced an enforcement action against Wells Fargo related to improper sales practices. Following investigations revealing widespread abuse by thousands of employees (e.g., opening deposit and credit accounts without customer consent), Wells Fargo paid civil monetary penalties of $185 million and other substantial punitive fees and fines. This case study uses this real-world example to explore the influence of materiality on the scope of an audit, the auditor’s responsibility for detection and communication of noncompliance with laws and regulations (NOCLAR), and the auditor’s consideration of the control environment in the evaluation of internal controls over financial reporting (ICFR). After completing the case, learners are able to discuss relevant professional standards and recognize the impact of materiality considerations on decisions about financial statement misstatements, NOCLAR, and internal control deficiencies. JEL Classifications: M41; M42.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"52 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136129464","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This teaching case creates an Escape Room experience for managerial accounting students to reinforce relevant costing and short-term decision concepts. Within the Escape Room, students analyze five short-term decisions within 50 minutes to “escape” for the weekend. Specifically, students identify relevant information, perform the necessary calculations, and evaluate their results to make a recommendation on how to improve firm profitability. The Escape Room seeks to build a greater understanding of relevant costing by creating a narrative, linking the five short-term decisions, and formatting every decision using an input-process-output (IPO) framework. The Escape Room also uses gamification elements to promote engagement and interest in learning these concepts. Students agree that the Escape Room increases engagement and fosters an understanding of relevant costing and short-term decision concepts. We see one of the strongest benefits of the Escape Room is its ability to scale across class formats and provide automatic feedback to students. Data Availability: Data are available upon request.
{"title":"The Great Accounting Escape: A Teaching Tool for Relevant Costing and Short-Term Decisions","authors":"Jennifer M. Cainas, Juliana M. Kralik","doi":"10.2308/issues-2022-003","DOIUrl":"https://doi.org/10.2308/issues-2022-003","url":null,"abstract":"This teaching case creates an Escape Room experience for managerial accounting students to reinforce relevant costing and short-term decision concepts. Within the Escape Room, students analyze five short-term decisions within 50 minutes to “escape” for the weekend. Specifically, students identify relevant information, perform the necessary calculations, and evaluate their results to make a recommendation on how to improve firm profitability. The Escape Room seeks to build a greater understanding of relevant costing by creating a narrative, linking the five short-term decisions, and formatting every decision using an input-process-output (IPO) framework. The Escape Room also uses gamification elements to promote engagement and interest in learning these concepts. Students agree that the Escape Room increases engagement and fosters an understanding of relevant costing and short-term decision concepts. We see one of the strongest benefits of the Escape Room is its ability to scale across class formats and provide automatic feedback to students. Data Availability: Data are available upon request.","PeriodicalId":46324,"journal":{"name":"ISSUES IN ACCOUNTING EDUCATION","volume":"34 1","pages":""},"PeriodicalIF":0.9,"publicationDate":"2023-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139329413","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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