: GUIDELINES FOR CASE STUDIES
Objectives of the case assignment:
The main objectives for the inclusion of case assignments in the financial reporting courses are:
- To involve students in group research, analysis and decision-making.
- To introduce problems that do not have definitive answers — that is, there may be several alternatives, but no one right answer.
- To familiarize students with accounting pronouncements, databases, and other resource materials.
- To improve student skills to identify, interpret and apply authoritative accounting literature and to identify prevalent accounting practices on a given accounting issue.
Assignment:
Students are to form groups of no more than three members each, analyze the case, research FASB Codification and other relevant print and web resources applicable to the case and submit a written analyses addressing requirements at the end of the case.
Written analyses should be approximately 6-8 pages, double spaced (not including exhibits, pro-forma financial statements, electronic search results, bibliography, etc.) with 1-inch margins on all sides and 12-point font. Bibliography and Exhibits (Not included in the page limit) must be included. Please see attached sheet titled SAMPLE BIBLIOGRAPHY to know the appropriate form for the presentation of bibliography. The bibliography must be presented in alphabetical order.
You do not need to frame your answers in an overall framework (like the ones commonly followed for management or business strategy cases) such as introduction, problem definition, alternatives, analysis, and recommendations. Instead, just answer the requirements provided to you.
Grading Criteria: Analyses will be graded on the following:
- Identification of relevant issues.
- Identification and analysis of alternatives. Correctness of numbers derived and appropriateness of rationale provided.
- Inclusion of specific recommendations and rationale behind them.
- Quality and depth of research. Appropriate paraphrasing and citations are required (i.e., FASB ASC 450-10-05-55)
- Quality of writing (grammar, spelling, punctuation, sentence structure, etc.).
Cases versus homework problems:
Cases are not like homework problems. There is not a right answer or a wrong answer, only well thought-out and poorly thought-out answers. Another significant difference between case and homework problems is that homework problems are usually specifically related to the chapter material; cases, on the other hand, may have issues in them that are not related to the chapter material. A final difference is the significantly longer time you will spend preparing for a case. Given that each of the three students in a group has 15% of the course grade attached to the case assignment, the case assignment carries an equivalent of 45% of the entire semester’s grade for one student. It is an important assignment with important learning objectives. Accordingly, it requires significant time and effort. Please plan ahead of time!
FASB Codification
To support your positions on issues raised in the case, you will need to research the Financial Accounting Standards Board ASC (Accounting Standards Codification). ASC is the single source of authoritative nongovernmental U.S. generally accepted accounting principles (US GAAP). The structure used in ASC is topic (e.g., leases), subtopic (e.g., Operating Leases), section (e.g., Disclosure), and subsection (e.g., Lessors).
Our institution has secured a professional subscription to FASB ASC which allows sophisticated search options and full access to materials. Students and faculty can access ASC through a link on the library’s web site (click on databases and then on FASB codification). If you like, you can review FASB’s Learning Guide for Codification by accessing this link on the FASB web site. The complete URL is:
If you know the name and number of the accounting pronouncement before the FASB Codification project, you can also use the “cross-reference” feature available on the Codification site to obtain the corresponding Codification reference. For instance, if you want to know the Codification references for FAS 34 on Interest Capitalization, from the “cross reference” bar, select FAS as Standard type, 34 as standard numbers and click ‘generate report’.
Researching FASB Accounting Standards Codification
(excerpts from FASB web site)
The Codification provides an entirely new method for performing research that was not possible with previous standards. In effect, the Codification has already completed a portion of research through its topical organization and grouping of the content by nature. Therefore, to take full advantage of the system, users should adopt the research model that leverages the Codification structure and reduces the amount of research time.
Below are some high level steps to best leverage the Codification:
- Determine your topic of interest and the nature of the issue – Based on our research, over 90% of users know their topic of interest before they begin their research. The nature of your issue (such as measurement, disclosure, and so forth) lets you access just that nature of content.
- Topic of interest is known –Browse, or jump (with GoTo), to the Topic and identify the most relevant Subtopic. Access the Section that relates to the nature of your issue. Once in the Section, expand the table of contents within that Section to help isolate your area of interest. In some cases, you may know the Topic, but may want to view a specific Section for the entire Topic. For example, you may want to review all disclosure requirements for the Receivables Topic. In that case, use the Join Sections feature.
- Broad research where a specific topic is not known – Start by browsing the Areas in the left navigation to get some perspective. After you identify a Topic, follow the approach in the preceding steps. While it may sound like more steps, topical browsing reduces the time otherwise spent using text searches and multiple refinements of search expressions.
- Narrow research related to unique terms or phrases – Determine whether you are searching for independent word(s) or an exact phrase. If searching for a phrase, use the Advanced Search feature. After receiving your search results, use the “narrow by” features provided on the Search Results page(s) or refine accordingly.
How to Reference FASB Codification in your case write-ups
Provided below is an example of how FASB Codification can be referenced in the case write-ups. Please note that this is just an illustrative example from another case on another issue. Alternative ways are acceptable and welcome.
Discuss whether or not management’s proposals to recognize (i) the estimated non-redemption of the restricted gift cards issued during the special Thanksgiving promotion and (ii) the estimated gift card ‘breakage’ would comply with GAAP.
Management’s proposal to recognize the remaining amount of unredeemed gift cards ($2,000,000) as 2008 sales violates GAAP. MVS does not have prior experience of running a special promotion like this and therefore non-redemption cannot be reliably estimated. Students can analogize this situation to FASB ASC paragraph 605-50-25-4 which states that “if the amount of future refunds cannot be reasonably and reliably estimated, a liability shall be recognized for the maximum potential amount of the refund”. Among the factors that might impair a company’s ability to make a reasonable and reliable estimate per FASB ASC paragraph 605-50-25-4 is the absence of historical experience with similar types of sales incentive programs with similar products. Only when these gift cards expire after six months, MVS can recognize in 2009 the balance outstanding in the unredeemed gift cards as other income.
Determining the applicable GAAP for financial reporting of estimated gift card ‘breakage’ can be tricky. Researching FASB Codification yields no results because authoritative guidance on the issue is not available. There are numerous situations in which authoritative guidance is unavailable because of resource constraints on the accounting standard-setters. Unless the issue is pervasive, and accounting practices divergent, standard-setters are unlikely to address it. Even in the cases where the issue is addressed, a significant time gap generally exists before a final standard is issued given the deliberative processes followed in accounting standard-setting. Meanwhile, as stated in FASB ASC paragraph 105-10-05-2: “If the guidance for a transaction or event is not specified within a source of authoritative GAAP for that entity, an entity shall first consider accounting principles for similar transactions or events within a source of authoritative GAAP for that entity and then consider non-authoritative guidance from other sources.”
Literature Search other than FASB Accounting Standards Codification
Definitive accounting standard is not available on each issue in FASB Codification. Where necessary, you must supplement the FASB Codification research with additional research on Conceptual Framework, International Financial Reporting Standards, International Financial Reporting Interpretation Committee (IFRIC) pronouncements, journal articles, SEC materials not included in FASB Codification, etc. Preferably, you should not quote from any introductory, intermediate, or advanced accounting text because they typically do not constitute authoritative guidance. Similarly, newspaper articles and internet sources such as Wikipedia are not considered authoritative sources.
Students can use other databases also for research purposes. One commonly used database (available on Bentley Library’s website) is Accounting Research Manager. It contains accounting, auditing, governmental, internal controls and SEC information as well as primary source data and it indexes accounting and auditing standards as well. However, please note that not all information in that database constitutes authoritative support. In addition to authoritative standards, the database also includes interpretive and proposal-stage information, which is not authoritative.
Researching IFRS (International Financial Reporting Standards)
Please note that IFRS comprise of all the accounting pronouncements issued by IASB (International Accounting Standards Board) and its predecessor, IASC (International Accounting Standards Committee). As such, they include all of the following pronouncements:
- IFRS (International Financial Reporting Standards), IFRS for SMEs (Small and Medium Enterprises) and IFRIC (International Financial Reporting Interpretations Committee) issued by IASB
- IAS (International Accounting Standards) and SIC (Standards Interpretations Committee) issued by IASC.
Users can log onto the IASB web site (www.ifrs.org) to obtain free access to the versions of IFRSs (including interpretations) and the application guidance that is an integral part of those standards. Free registration is required.
However, unlike FASB Codification, there is no simple way to research IFRSs on the IASB web site. It might be more efficient to do a Google search (using the topic of interest as the search term) to obtain the exact reference of the pronouncement, and then get the text of the pronouncement from the IASB web site. For accessing the authoritative IASB literature on the illustrative examples, implementation guidance, and bases for conclusions that accompany, but are not part of, the standards the user needs to have a paid subscription to eIFRS. At Bentley, you can obtain all these documents by accessing the CCH database titled ‘Accounting Research Manager’ on the library web site. In addition to IASB’s, it includes literature from AICPA, FASB, SEC and PCAOB as well.
Oftentimes, the web sites of international accounting firms have useful commentaries and illustrative guidance available free of charge on their web sites (IASplus.com, for instance). Although not authoritative, such guidance on accounting issues is easy to understand especially because of the illustrations provided.
Writing help is available
If you experience difficulty in writing a quality paper, make an appointment with a consultant in The English Writing Center. Misspelled words will not be viewed favorably. A poorly written paper will be severely penalized. No late papers will be accepted for any reason. It will be assumed that all members of the group contributed equally to the analysis unless the members indicate otherwise.
Academic Honesty Policy
You can discuss this case study with other members of your group, but each group is responsible for completing its own write-up. Collaborating with other groups on case study write-ups would be considered a violation of academic honesty system at Bentley.
SAMPLE BIBLIOGRAPHY
Bromwich, M., R. Macve, and S. Sunder. 2008. Conceptual framework: Revisiting the basics—A comment on Hicks and the concept of “income” in the conceptual framework. Paper presented at American Accounting Association Annual Meeting, Session 6.1, Anaheim, CA, August 5.
Coopers & Lybrand. 1988. Accounting for Income Taxes: Focusing in on FASB Statement 96. Coopers and Lybrand.
FASB Accounting Standards Codification. 360-20-55-6. Methods of Accounting for Real Estate Sales when Criteria for Full Accrual Method Are Not Met.
___________. FASB Accounting Standards Codification. 605-10-S99-1. Revenue recognition.
Gujarathi, Mahendra, and R.E. Hoskin. 1992. Evidence of Earnings Management by the Early Adopters of SFAS 96. Accounting Horizons (December): 18-31.
International Accounting Standards Board (IASB). 2004. IFRS No 5: Non-Current Assets Held for Sale andDiscontinued Operations. Available at: http://www.iasb.org/NR/rdonlyres/27621086-6D5D-4BD5-8C7C-F3B0788D9EFF/0/IFRS5.pdf
Securities and Exchange Commission. 2007. Chairman’s address to the SEC Roundtable on International Financial Reporting Standards. Available at: http://www.sec.gov/news/speech/2007/spch030607cc.htm.
Case for Spring 2018: Channel-Stuffing Reinvented: Earnings Management in Toshiba’s Personal Computer Division
Submission deadline: Please deposit an electronic copy (one per group) in the assignments tab on Bb.
