As a result of the COVID-19 crisis there was a global move to home working, and increased reliance on video conference facilities such as those offered by Zoom Video Communications. At the same time there was a sudden increase in trading volumes for Zoom Technology shares. The latter is a company that sells electronic technology for mobile phones. It was soon established that this was a clear case of mistaken identity. Please propose and explain a test for establishing whether the markets are efficient in this case.
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As a result of the COVID-19 crisis there was a global move to home working, and increased reliance on video conference facilities such as those offered by Zoom Video Communications. At the same time there was a sudden increase in trading volumes for Zoom Technology shares. The latter is a company that sells electronic technology for mobile phones. It was soon established that this was a clear case of mistaken identity. Please propose and explain a test for establishing whether the
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- The COVID-19 pandemic has affected one of your customers, NEST Ltd adversely. Even though the economies are fast recovering, they have contacted your company to request to purchase on credit instead of cash on delivery. Your boss, Alan, the Marketing Manager has instructed you to review their request. He has asked you to review NEST Ltd’s latest set of financial statements. (a)Identify the key financial statements. Explain how the information reported in these statements will help you to decide whether to accede to NEST Ltd’s request.Mr. Salim is the owner of an audit firm who audit the financial statements of the companies by charging fee. Lulu hypermarket is one of their old clients. Last month lulu hypermarket distributed discount coupon to their customers and it was a coincident that external auditors were also there, and they also got some coupons. Which of the following threat do you think can arise in this situation? a. Familiarity threat b. None of the options c. Self-interest threat d. Self-review threatIn the 1990s, GEC was a major UK company, specializing mainly as a defense contractor. It had a reputation as a risk-averse company with a large cash pile. In 1996 a new chief executive led the board into a major change in the company’s strategy. GEC sold off its defense interests and switched its business into telecommunications, mainly in the USA, buying large quantities of telecommunications assets. The company also changed its name to Marconi. A number of factors, including a huge over-capacity in network supply, led to a collapse in the market for telecommunications equipment in 2001. Many of Marconi’s competitors saw the downturn coming, but Marconi did not. It assumed, incorrectly, the market downturn would be brief and there would soon be recovery and growth. Within a year loss of shareholder confidence resulted in a collapse in the Marconi share price, reducing the value of its equity from about £35 billion to just £800 million. In July 2001, the company asked for trading in…
- The CFO of PKD Corporation is very uncomfortable with its current risk exposure related to the possibility of business disruptions. Specifically, PKD is heavily involved in E-business, and its internal information systems are tightly interlinked with its key customers’ systems. The CFO has estimated that every hour of system downtime will cost the company about $10,000 in sales. The CFO and CIO have further estimated that if the system were to fail, the average downtime would be one hour per incident. They have anticipated that PKD will likely experience 50 downtime incidents in a given year due to internal computer system problems and another 50 incidents per year due to external problems—specifically, system failures with the Internet service provider (ISP). Currently, PKD pays an annualized cost of $150,000 for redundant computer and communication systems, and $100,000 for ISP support just to keep the total expected number of incidents to 100 per year. Required: Given the…In 1996, allegations were made against Moody’s that it was issuing ratings on bonds it had not been hired to rate, in order to pressure issuers to pay for their service. How has the increasing availability and use of the internet impacted the ability of stock traders to act unethically?In recent years, globalization of business and factors such as technological disruption, tax reform, trade policies, and changing demographics in the workforce cause uncertainty and volatility in stock and bond markets. Why might it be important for you to consider current economic and other events as part of planning an audit? (Select all that apply.) Question content area bottom Part 1 A. Profitability, internal controls, and incentives and opportunities to misreport can all change rapidly in the current environment, making it imperative that the auditor understand these factors in addition to the client's industry and operating environment. To develop effective audit plans, auditors must have the expertise to assess external environment risks. B. Volatility in stock and bond markets can create uncertainty about the future profitability of certain industries and/or specific companies. This could ultimately affect the entity's ability to…
- Do you think the PointCast situation a case of pride clouding someone’s judgment or more accurately a representation of the rapidly changing nature of computer-related business? In other words, if Hassett’s advancement had been in an industry that is not known for such rapid changes, would he have been considered foolish if he hadn’t held out for more , California. Its founder and CEO, Christopher Hassett, was “the most famous guy on the Internet,” said Hassett’s former attorney, Allen Morgan. Hassett was named CNET’s newsmaker of the year—an honor previously bestowed on giants such as Bill Gates of Microsoft and Larry Ellison of Oracle. The “push technology” that PointCast pioneered was making headlines as well as being featured on the cover of Wired magazine as “The Radical Future of the Media beyond the Web.” All the attention around PointCast motivated one of the world’s largest communications companies—Rupert Murdoch’s News Corporation—to make them an offer of $450 million to…In the year 2000, the Justice department announced that it was filing a case against Microsoft for violation of antitrust laws, specifically – tying contracts.How seriously do markets take antitrust allegations? What was Microsoft stock price between the beginning of the year 2000 and the end of 2001?The Steinhoff saga, possibly the biggest case of corporate fraud in South African business history,has dominated financial and general news since the company’s share price collapsed on5 December 2017.The reality is that it seems as though the crisis at Steinhoff is more than an overstatement of incomeand asset values which has triggered a liquidity and credit crunch. It is about the collapse ofcorporate governance and great levels of unethical business leadership.Required: Do some research and explain why it is important for businesses to have ethical standards and codes of conduct for financial managers. Include another example where poor ethical practices by people in a management or trustposition have led to significant losses.
- 1. During the time frame that Intel was making exclusivity payments to Dell, Dell’s business model was being adversely affected by the increasingly competitive nature of the PC industry. What responsibility, if any, do auditors have to analyze a client’s business model? Do auditors have a responsibility to track and analyze key developments in a client’s industry? Defend your answers. 2. What ethical issues do exclusivity agreements such as that between Dell and Intel raise? Are there analogous ethical issues faced by audit firms and their clients? Explain.Ethical problems seem to be an issue in finance in the current global business environment. Several websites, like Bloomberg and CNN Money, have analyzed and discussed various financial scandals. Take a look at some of these articles and pro- vide a summary of bad practices of some of the major organizations involved in the scandals. Include instances from different countries, like the Volkswagen emissions scandal, the Toshiba accounting scandal, and the Libor scandal.Accounting In a description of a fraud scheme at Sharefore Inc., an analyst writes: “The next quarter, analyst expectations are higher, but sales have not picked up. The firm provides additional incentives to its sales force, uses overtime to boost shipments but now has additional expenses to contend with (incentives and overtime), so it does not fully accrue all its consulting expenses. Third quarter rolls around and sales still haven't improved enough, but the analysts keep increasing targets. Because this time, operating tactics are not sufficient, management pressures the CFO to meet analyst forecast numbers. The CFO becomes aggressive in the interpretation of installment sales and expense accruals. As expectations keep rising, so does the firm's stock price.” What form or forms of financial statement fraud is this? Where would we expect to see the impact of this form of fraud in Sharefore Inc.’s financial statements?