Question 1 20 Points United States Securities And Exchange C

Question 1 20 Ptsunited States Securities And Exchange Commission S

Question 1) (20 pts) United States Securities and Exchange Commission sued Dean L. Buntrock, Phillip B. Rooney, James E. Koenig, Thomas C. Hau, Herbert A. Getz, and Bruce D. Tobecksen on August 29, 2005 due to FRAUD ACTION. The litigation release no: 19351 is available at the following link. Read the release, and a) List the fraudulent actions given in the third paragraph. (5 pts) a) Select TWO of the fraudulent actions you listed in (a) and explain possible effects of each action on the balance sheet and income statement of the company. (15 pts) (7.5 pts per action, 100 words per action) Question 2) (40 pts) FY2019 financial report of OOREDOO is available at the following link. Select any 4 of the red flags explained in Chapter 3 of your textbook (see Step 4- Accounting Analysis) and evaluate OOREDOO’s 2019 financial report in terms of each of those 4 red flag items you selected. (100 word per red flag and 10 pts per red flag) Question 3) (40 pts) Required: Based on your knowledge of the fashion industry, discuss for each of the above policies why the accounting policy considered as KEY ACCOUNTING POLICY by one or more of the firms operating in fashion industry. (8 pts per policy, 80 words per policy) prepare a 1100 words essay (excluding cover page, abstract, and references) on the relationships and interdependencies between marketing and other functional areas.

Paper For Above instruction

The assignment encompasses three key areas: an analysis of fraudulent actions by certain individuals as per an SEC lawsuit, an evaluation of red flags in OOREDOO's 2019 financial report, and an exploration of key accounting policies in the fashion industry. This comprehensive approach examines legal accountability, financial statement integrity, and strategic financial decision-making within different industry contexts, emphasizing the interconnectedness of accounting, marketing, and operational functions in shaping corporate success and compliance.

The first part involves reading the SEC litigation release number 19351, identifying three fraudulent actions committed by the defendants, and analyzing the potential impacts of two of these actions on a company's financial statements. Fraudulent actions such as misappropriation of assets, falsification of financial records, and insider trading can distort a company's financial health, affect investor confidence, and result in regulatory penalties. Misappropriation of assets, for example, may lead to understated expenses or overstated assets, impacting profitability and asset valuation, while falsification of records can inflate revenues or disguise liabilities, misleading shareholders and regulators. These fraudulent behaviors compromise the reliability of financial statements and can lead to severe legal and financial consequences for the company.

The second part involves evaluating OOREDOO's 2019 financial report by assessing four red flags outlined in Chapter 3 of the relevant textbook. These red flags include unusual increases in receivables, significant changes in revenue recognition policies, high levels of inventory, and declining cash flows. For instance, an unusual increase in receivables might indicate aggressive revenue recognition or potential collection issues, which could artificially inflate sales figures and distort profitability. Changes in revenue recognition policies may reduce comparability over periods, raising concerns about earnings management. Elevated inventory levels can signal overproduction or obsolescence risks, impacting asset valuation and liquidity. Declining cash flows might reflect poor operational efficiency, raising questions about ongoing sustainability.

The third part focuses on key accounting policies relevant to the fashion industry, where rapid inventory turnover and brand value are critical. Policies such as inventory valuation methods (e.g., FIFO versus weighted average), revenue recognition criteria, and assumptions relating to impairment of assets are key because they directly affect reported profitability and asset valuation. For example, the choice of inventory valuation impacts cost of goods sold and gross profit, which are central to performance indicators in fashion. Revenue recognition policies determine when sales are recorded, affecting sales and profit timing, especially crucial during seasonal peaks. Impairment policies influence asset valuation, critical when brands face fashion trend risks and fluctuating consumer demand.

The interdependence between marketing and other functional areas—finance, operations, and R&D—is fundamental. Marketing influences product development, pricing strategies, and customer engagement, which require supporting financial planning and operational adjustments. For example, effective marketing campaigns can drive sales growth, impacting revenue forecasts and inventory management. Conversely, financial health influences marketing budgets and investment in branding. Operational decisions, such as supply chain adjustments, are influenced by marketing strategies aimed at expanding markets or launching new collections. R&D innovations depend on marketing insights into consumer preferences, shaping product features and innovation pipelines. This interconnectedness ensures strategic coherence and drives overall business performance.

In conclusion, understanding the complexities of legal accountability, financial reporting red flags, and strategic accounting policies enables firms to maintain transparency, manage risks effectively, and align operational and marketing strategies for sustained competitive advantage. The synergy among these functions emphasizes that comprehensive analysis and integrated decision-making are essential for navigating the dynamic business environments of diverse industries like finance, telecommunications, and fashion.

References

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10. Smith, P., & Nair, G. (2018). Strategic Fashion Management. Routledge.