Group Project

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Group Project

• MM 010
• Spring, 2006

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Group Project

• Two cases
• Case Analysis
• Group Presentation to the class
• Q A from class

3
Purpose

• To leverage what you have learned and worked on
  this semester in the course
• To get some experience in working in a group
  format
• Gain experience in oral communications/presentatio
  n skills

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Dates

• Thursday, April 21st
• Teams A, B, C, D
• Case MyTeam
• Thursday, April 28th
• Teams E, F, G, H
• Case Google
• There will be a total of 8 groups. There will be
  three (3)- five person teams, and five (5)-six
  person teams.

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Presentation Guidelines

• 20 minutes of presentation
• 10 minutes of Q A
• Everyone in the group should be given equal time
  in the presentation
• Focus should be on both quality of the content
  and the quality of the presentation
• You only need to come on your presentation day to
  your specific group time slot
• May 4th class Final Exam-to be handed out

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Audience

• You will prepare the same case
• Focus should be on active listening and well
  thought out, relevant questions to the presenting
  group during the QA session

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Some thoughts

• Be aware of group dynamics
• Plan your time-practice and preparation
• Use numbers
• Understand what the competitors are doing
• How would Ram look at the situation at hand
• How will your recommendations affect R, M, V,
  growth, customers, cash generation
• Be realistic
• Make sure all group members are involved in the
  QA process

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Grading

• Quality of the content
• Substantive analysis and critical thought
• Recommendations moving forward
• Quality of the presentation
• Style
• On schedule
• Allocation of participation by each group member
• Ability to communicate your analysis and
  recommendations
• Ability to conduct a relevant/interesting QA
  session

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Questions about Group Project?
10
Case Kendall Square ResearchGeorge
McClelland at KSR

• March 2, 2006
• Peter Bell

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(No Transcript)
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Accounting Policy

• What is GAAP?
• Generally Accepted Accounting Principles
• set of accounting rules used to standardize the
  reporting of financial statements
• Can differ by country
• Who sets it?
• Why is it important?

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When is Revenue Recognizable?

• It must be
• realized or realizable
• AND
• Earned
• Criteria
• Persuasive evidence of an arrangement exists
• Delivery has occurred
• The vendors fee is fixed or determinable
• Collectibility is probable.
• Source SEC SAB No. 101, Revenue Recognition in
  Financial Statements, issued in December 1999 and
  www.fasb.org

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Revenue Recognition

• Revenue usually is the largest single item in
  financial statements
• issues involving revenue recognition are among
  the most important and difficult that standard
  setters and accountants face.
• no comprehensive standard on revenue recognition
  exists,
• there is a significant gap between the broad
  conceptual guidance in the FASBs Concepts
  Statements and the detailed guidance in the
  authoritative literature
• Most of the authoritative literature provides
  industry or transaction-specific has been
  developed largely on an ad hoc basis in various
  pronouncements
• Those pronouncements include Accounting
  Principles Board (APB) Opinions, FASB Statements,
  American Institute of Certified Public
  Accountants (AICPA) Audit and Accounting Guides,
  AICPA Statements of Position (SOPs), FASB
  Interpretations, Emerging Issues Task Force
  (EITF) Issues, Securities and Exchange Commission
  (SEC) Staff Accounting Bulletins (SAB), and the
  like. Each focuses on a specific practice problem
  and has a narrow scope, and the guidance is not
  always consistent across pronouncements.
• Source http//www.fasb.org

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Restatements

• Enron, HealthSouth, Conagra, SunBeam, Xerox,
  Outback Steakhouse, Worldcom
• Restatements
• 216 restatements in 1999
• 330 in 2002
• 354 for the 12 month period ending June 30, 2004,
  according to the Huron Consulting Group's
  tracking of Securities and Exchange Commission
  data.

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Analysis

• DSO-235 days at the end of 1992
• 355 Days of Inventory
• 20 Fold increase in revenue over the past year
• Company Stock Option Plan
• Bank Line-Terms
• Prime plus two percent until quarterly earnings
  exceeded 250,000, then line increases to 5 MM
• Tax loss carry forward-no need to account
  conservatively

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The Audit Firm

• What does an auditor do?
• What is an audit opinion? Why is it important?
• There are only 20 customers? Why not check each
  one?
• Did the PW partner focus on ensuring that
  operating practices were consistent with the rev
  rec policy?
• What was the role of Wall St. analysts to probe
  in more detail be recommending the stock and help
  raise more equity capital?

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Restatement
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Stakeholders
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Summary

• Operating practices and accounting principles
  must be in sync
• Skepticism often takes a backseat to hope and
  greed
• The unraveling and fall often happen much more
  quickly than the rise
• The price managers pay for inattention to
  financial reporting is extremely high
• Leadership/entrepreneurial spirit-risk
  taking/integrity

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Next Week

• Spring Break
• Enjoy!!!!!!!!!!!!!!!
• March 16th
• Digital Angel
• Special Guest Todd Veale