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Should financial statement disclosures be greater? What are thepros and cons for the increased financial information beingdisclosed by public companies on their company's Internet websites?What are the pros and cons for increasing the information beingsupplied by companies in their segment reporting? What are the prosand cons for public companies increasing their disclosures offinancial forecasts? Where would you find a company's financialforecasts? Have you found any company's disclosure of its financialforecasts that you would like to share with the class? How will thenew IFRS proposed changes impact current U.S. companydisclosures?

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The International Organization of Securities Commissions (IOSCO)is a group of top securities administrators from about 50countries. The Securities and Exchange Commission (SEC) is a memberof IOSCO. IOSCO is a primary supporter of the internationalizationof financial reporting standards through the InternationalAccounting Standards Board (IASB). At a recent meeting, adiscussion of the pros and cons of internationalizing financialreporting standards included the following arguments:

Pro:

Having the same accounting standards for external financialreporting for all securities markets will reduce misunderstandingsand create comparable information. For example, investors will beable to compare the financial reports of similar companies locatedin the United States with those located in China and decide wherebest to allocate their investments. One set of accounting standardswill also save corporations money because they will not needmultiple sets of books to track their international operations.

Con:

Requiring companies that list on all global securities exchangesto use the same external reporting requirements will misleadinvestors. For example, in countries where the majority ofinvestment funds come from banks in the form of long-termborrowing, debt to equity ratios will look very different thanthose of comparable U.S. firms. Accounting information must reflectits environment. Besides, as all business becomes global, reportingrequirements will naturally evolve to what investors demand.

Instructions

Write a one-page summary reflecting your opinion about the valueof harmonizing accounting standards for global equity markets.Support your opinions by referencing comparable cross-countrycompanies you have located on the Internet.

CA20-5 WRITING (Implications of GAAP Rules on Pensions) JillVogel and Pete Dell have to do a class presentation on GAAP rulesfor reporting pension information. In developing the classpresentation, they decided to provide the class with a series ofquestions related to pensions and then discuss the answers inclass. Given that the class has all read the rules related topension accounting and reporting, they felt this approach wouldprovide a lively discussion. Here are the questions:

1. In an article in Businessweek prior to new rules related topensions, it was reported that the discount rates used by thelargest 200 companies for pension reporting ranged from 5% to 11%.How can such a situation exist, and does GAAP alleviate thisproblem?

2. An article indicated that when new GAAP rules were issuedrelated to pensions, it caused an increase in the liability forpensions for approximately 20% of companies. Why might thissituation occur?

3. A recent article noted that while “smoothing” is notnecessarily an accounting virtue, pension accounting has long beenrecognized as an exception—an area of accounting in which at leastsome dampening of market swings is appropriate. This is becausepension funds are managed so that their performance is insulatedfrom the extremes of short-term market swings. A pension expensethat reflects the volatility of market swings might, for thatreason, convey information of little relevance. Are thesestatements true?

4. Understanding the impact of the changes required in pensionreporting requires detailed information about its pension plan(s)and an analysis of the relationship of many factors, particularlythe:

(a) Type of plan(s) and any significant amendments.

(b) Plan participants.

(c) Funding status.

(d) Actuarial funding method and assumptions currentlyused.

What impact does each of these items have on financialstatement presentation?

5. An article noted “You also need to decide whether toamortize gains and losses using the corridor method, or to use someother systematic method. Under the corridor approach, only gainsand losses in excess of 10% of the greater of the projected benefitobligation or the plan assets would have to be amortized.” What isthe corridor method and what is its purpose? (Kieso 1176)

Kieso, Donald E., Jerry Weygandt, Terry Warfield. IntermediateAccounting, 16th Edition. Wiley, 2016-03-21. VitalBook file.

Robatelli's Pizzeria Case Study Introduction

On the morning of October 31st, Elaine Black, Chief I...Robatelli's Pizzeria Case StudyIntroduction On the morning ofOctober 31st, Elaine Black, Chief Information Officer atRobatelli's Pizzeria, was waiting for both Jim Saxton, databaseadministrator, and Peter Greyton, operations manager, to come toher office for a meeting. While waiting, Elaine was thinking aboutthe surge of telephone and Internet orders expected to be receivedthrough the company's customer order center within the next 12hours. Halloween had always been the most popular day of the yearfor people in the greater Pittsburgh area to order pizza fromRobatelli's. There were 53 restaurant locations to serve thesecustomers, but only one location to receive all of the orders andforward them to the right restaurant. Elaine's thoughts wereinterrupted as Jim and Peter entered her office. The followingconversation took place: ELAINE Well, guys, it's here again, ourbiggest day of the year. Not only is Halloween a busy day, but wehave the upcoming day after Thanksgiving, the week beforeChristmas, and Super Bowl Sunday. Can our current computer system'sinfrastructure and people keep pace with the orders we expect? JIMI think our systems are all running at peak performance. Weshouldn't have any computer concerns for today or those other busydays. PETER Everyone in the customer order center is focused onmaking sure that our customers get their pizzas as ordered. We haveplenty of people scheduled to work tonight, so we're good to go.ELAINE Terrific. But every time we face one of these peak salesdays, I start wondering about the long-term capacity andeffectiveness of our computer systems. Jim, we need to think longterm about our computer system. I was just reading an article thatI'd like you to take a look at. It's about Anheuser-Busch Companiesand their use of data mining. JIM I do agree with you, Elaine; weshould always be thinking about how newer IT systems can help us.Could you e-mail me the link to the article? ELAINE Sure, and Iwould like you to think about how we might use the same approach inour business. Peter, your order center people are doing a greatjob, but again there's something I'd like us to think about in thelong run. As you know, we now have to manually enter all customerorder center sales and store sales into our general ledger (GL). Ithink we could improve a lot of things if those sales areautomatically fed into our GL software. Why don't you think aboutany advantages you see for an automatic interface, and we'll lookat the costs compared to those advantages. How's that sound? PETERI'll do that. I'll give it some thought and work on a report aboutan automatic interface between our GL software and the point ofsale systems in our restaurants as well as the phone and Internetsales. How soon do you want to meet again to look at these issues?ELAINE Let's say, in two weeks at the same time. As Jim and Peterleft her office, Elaine continued to think about the features ofthe company's accounting information systems and whether or notdata extracted from these systems could facilitate the multipleneeds of the company. The focus had always been on providingaccurate financial accounting information from the variouslocations; however, the company's aggressive growth strategiesmeant increased emphasis on the system's ability to analyzedetailed customer information that could be translated intoincreased sales opportunities. Elaine knew the challenges theyfaced could very well affect the company's ability to maintain itscompetitive advantage. She realized that her department mustcontinually improve the company's information systems to help itachieve growth strategies. Operating state-of-the-art systems wasimperative to position the company to execute those growth plans.However, she was concerned about the possibility that restrictionsof the current information systems could actually prevent thecompany from doing what it wanted to do. Allowing restrictivesystems to prevent them from achieving business strategies was arisk that Elaine would not tolerate! Background Robatelli'sPizzeria is a great American success story. Started by DinoRobatelli in the 1960s, the business impetus was a family pizzarecipe. Introduced to the public at a church festival inPittsburgh's Little Italy, Robatelli's pizzas are now a recognizedtradition in the Greater Pittsburgh area. A full menu and localexpansion have led to its growing popularity over the years andhave helped it achieve nearly 50 percent of the area market share.Annual sales now exceed $100 million. Following is a timeline ofmilestones in the company's history: 1962 Dino and Gloria Robatellicontributed $500 and the family pizza recipe to a partnership thatopened the first Robatelli's Pizzeria. 1965 The Robatellis boughtout their business partners. 1967 The first Robatelli's franchiseopened. 1971–77 Dozens of new Robatelli's franchises openedthroughout the surrounding region. 1983 Home delivery servicebegan. 1992 A central, one-number calling system for allrestaurants was launched. 2003 Internet ordering began. The first“prototype pizzeria” opened. Today A total of 53 locations are inoperation.

Review the Robatelli's Pizzeria Case Study. Considering thenature of the relationship between Robatelli's Pizzeria home officeand its franchise owners, the company may be quite vulnerable totheft or fraudulent financial reporting committed by thesefranchise owners.

In 700 to 1,050 words, discuss the following: Describe threecomponents of the fraud triangle and how each would relate to afranchise owner's likelihood to defraud Robatelli's Pizzeria.Identify three types of fraud to which Robatelli's Pizzeria may besusceptible. Indicate whether the fraud is classified as managementfraud, employee fraud, vendor fraud, customer fraud, or computerfraud for each. Suggest an internal control that could beimplemented to prevent or detect the potential fraud for each.Design a 5- to 6-bulleted item code of ethics for Robatelli'sPizzeria. You may find guidance by searching the Internet forexamples.

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