What internal control principle(s) does it appear was (were) violated at Netflix? How might Netflix have designed its internal processes differently to avoid the situation that arose with Mr. Kail?

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On November 24, 2014, Netflix filed a lawsuit against its former vice president of IT operations, Mike Kail, alleging fraud, breach of fiduciary duties, and other charges. Here is an excerpt from the lawsuit filing in Superior Court of the State of California, Santa Clara County:

“…During his tenure at Netflix, including as Netflix’s Vice President of Information Technology Operations, Kail was a trusted senior-level Netflix employee. Kail’s job responsibilities at Netflix included negotiating and executing contracts on behalf of Netflix to acquire IT-related products and services…approving invoices for payments that third parties would request related to IT products and services purchased by Netflix….after Kail approved such invoices, Netflix would pay the third parties for these approved invoices. Kail was a trusted, senior-level Netflix employee, with authority to enter into appropriate contracts and approve appropriate invoices.” (See entire legal document at http://www.scribd.com/doc/248259590/Netflix-v-Kail.)

Netflix is suing Mr. Kail for fraud, breach of fiduciary duties, and other actions. Mr. Kail was in charge of entering into and authorizing contracts for Netflix’s tech vendors, which included two companies, Vistara IT and Netenrich (both founded/owned by Mr. Raju Chekuri.) At the same time, Mr. Kail had his own company on the side called Unix Mercenary, which he did not disclose to Netflix.

Mr. Kail’s company Unix Mercenary received 12 – 15% commissions on all contract invoices paid by Netflix to Vistara IT and Netenrich. Part of the evidence that Netflix outlines in its lawsuit are emails between Mr. Kail and employees of Netenrich which refer to “referral fees” from Netenrich to Unix. Here is an excerpt from an email from Netenrich to Kail (from the above-mentioned lawsuit filing):

…”[We] discussed getting you paid and I just need to ensure the payments from Netflix are in Netenrich’s bank account…I suggest we employ the following process to ensure you receive your referral fees on a timely basis…”

Over a three-year period, Netflix paid approximately $3.7 million to Vistara IT and Netenrich, which would translate into commission payments of between $440,000 – $550,000 to Unix Mercenary. The lawsuit only mentions specific payments of $76,000 to Unix Mercenary.

Incidentally, Mike Kail left Netflix in August 2014 to become Yahoo’s Chief Information Officer (CIO).

Respond to the following questions in the MODULE 5 Discussion Forum

1.What internal control principle(s) does it appear was (were) violated at Netflix?
2.How might Netflix have designed its internal processes differently to avoid the situation that arose with Mr. Kail?
3.Should Mr. Kail be held totally liable for this situation? Does Netflix have any degree of responsibility in this situation?

Locate the “Cash Flow” tab and complete the analysis. Please keep in mind that your project may have a negative cash flow. If so, the next assignment will attempt to provide creative solutions to mitigate this.

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Assignment #5

406 South Boulder Ave
(DRAFT) Rent Roll
                 
Residential Income                
                 
  Unit Type (Bd/Ba) # of Units SF Per Unit Total SF Monthly Rent/Unit Monthly Rent Total Total Annual Rent Monthly Rent/SF
  1.Bedroom 50 750 37,500 $                     1,850 $                      92500 $           1,110,000 $                     2.47
  2.Bedroom 60 900 54,000 $                     2,150 $                    129000 $             1,548,000 $                     2.39
  3.Bedroom 20 1100 22,000 $                     2,450 $                       49000 $588,000 $                     2.23
  Studio 50 500 25,000 $                     1,500 $                       75000 $                 900,000 $                     3.00
  TOTAL 180   138,500   $                   345,500 $             4,146,000 $                     2.52

 

After reviewing your total development cost, you and your partners are concerned about where you are going to find enough money to do the deal. Luckily, one of your friends just bought a house and introduces you to their mortgage lender at a local bank. The lender also happens to underwrite commercial loans and is excited to hear about your new company and the proposed project. Before any sit-down meeting, he provides you with the terms for their commercial lending program. He tells you to complete your financial analysis using the loan terms provided and set up a meeting at a later date to discuss the project further.

 

At this point, you and your partners have researched all of the information and costs needed to analyze the deal, but you still need to complete your cash flow analysis. The cash flow is a critical step in determining whether or not your project is profitable and if you need to make adjustments to the scope of work, construction budget, rent roll, etc. Ideally, your project will cash flow positively and you can confidently move forward with the project. However, more often than not, the project produces a negative cash flow or does not meet your minimum return requirements. It can be discouraging to be put in this position, but it does not necessarily mean the project is a bust. The best developers thrive in these situations because they come up with creative solutions that very few people have the skills to figure out.

an ter

Assignment:

  1. Using your existing excel spreadsheet, find the tabs labeled “Sources & Uses”, “Cash Flow,” “Sale,” and “Amortization.”
  2. Locate the “Cash Flow” tab and complete the analysis. Please keep in mind that your project may have a negative cash flow. If so, the next assignment will attempt to provide creative solutions to mitigate this.
  3. Using the loan terms and amortization tabs provided by your “lender”, complete the table on the “Amortization” tab.
  4. Finish the calculations on the “Sale” tab.
  5. Review the “Sources & Uses” tab and determine the equity to debt ratio.
  6. Save alltabs of your spreadsheet and submit to instructors as a PDF. 10 Points

 

Why is it important for companies to implement good internal control? What are the principles of internal control? Explain your answer.

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Internal control

Q2.Why is it important for companies to implement good internal control? What are the principles of internal control? Explain your answer.

Q3. A company wants to use the allowance method to account for bad debts. You are assigned to explain to the company the different ways it can use to estimate bad debts

4- Write a report on whatever you use to research and what you write in a different document because we will discuss it separately in class

 

Prepare the Statement of Cash Flows of Dovelly Ltd for the year ended 30 June 2020 using the indirect method. Define the Going concern principle when preparing the Cash Flow Statement.

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Question 1 (Marks: 35)

Fut and Ball are partners in a sports event organisation business called Futball Events.

They share profits and losses in the ratio 1:3 respectively.

Fut and Ball have decided to dissolve the partnership on 30 June 2020, to take up international positions in Greece.

The following information was provided by the bookkeeper:

List of balances as at 29 June 2020: Debits Credits

Capital: Fut 100 000

Capital: Ball 300 000

Current Account: Fut 138 500

Current Account: Ball 87 000

Drawings: Fut 117 000

Drawings: Ball 198 000

Profit and Loss 523 380

Goodwill 50 000

PPE 480 000

Bank 185 000

Receivables 45 000

Payables 85 120

Income received in advance 15 000

Additional Information, still to be recorded for 30 June 2020:

  1. All the PPE was sold for R 418 000, but only R 398 000 was transferred into the bank account. The difference was commission paid for the sale.
  2. The income received in advance had to be refunded in full.
  3. Receivables were all collected, less 5% settlement discount granted.
  4. Payables were negotiated and settled by paying R 70 010.
  5. The partnership agreement only stipulates that partners each receive a R 120 000 salary per annum. This has not yet been taken into account.

Required:

Q.1.1 Prepare the following accounts to record the dissolution of the partnership in the General Ledger of Futball Events for the 30 June 2020.

  • Realisation account.
  • Bank account.
  • Capital accounts (Fut and Ball) – in columnar format. (35)

Question 2 (Marks: 35)

Fix Ltd is a public listed company involved in the manufacture of adhesives. Fix Ltd has an authorised

share capital of 5 000 000 shares and an authorised 10% preference share capital of 800 000.

During 2018, the first year of incorporation, the directors of the company took up 10% of the authorised ordinary shares and the public another 30%.

ALL preference share capital still remains unissued.

The following share transactions took place during the 2019 financial year:

25 January: 500 000 10% preference shares were sold and receipted to National Bank at R 10 per share.

31 January: The 500 000 10% preference shares were allotted.

07 March: It was agreed that half of the remaining authorised ordinary share capital would be issued to the public for a compensation of R 9 000 000. This transaction will be underwritten by Exchange Underwriters for a commission of 5%.

15 March: Applications closed and 1 000 000 applications were received and receipted.

25 March: All ordinary shares were allotted and the transactions with the underwriter completed and paid.

31 December: A final dividend of R0,80 per ordinary share was declared.

Required:

Q.2.1 Complete all the share transactions in the General Journal of Fix Ltd for the financial year end 31 December 2019. Ignore journal narrations.

(27)

Q.2.2 Name and discuss two other types of share issues other than to the public. (8)

Question 3 (Marks: 45)

Dovelly Ltd is a business operating in the mining sector and has recently expanded their market which required an additional investment in PPE. The following information relates to Dovelly Ltd:

Trial Balance at year end 30 June 2020:

R ‘000 R ‘000

CREDITS: 2020 2019

Ordinary Share Capital 15 900 11 521

Retained Earnings beginning of financial year 3 290 1 069

Long term loan 12% : FBN Bank 2 829 3 480

Accumulated depreciation on Equipment 2 270 890

Accumulated depreciation on Vehicles 930 610

Allowance for Credit losses 140 100

Payables 899 645

Rental payable 135 130

Dividends payable 0 634

Bank overdraft 756 0

SARS (tax payable) 1 528 1 808

Revenue 24 789 19 567

Dividends received 61 59

Interest received 11 49

DEBITS:

Equipment at cost 11 500 7 800

Vehicles at cost 4 789 3 590

Land and Buildings 8 320 0

Investment at cost price 889 973

Receivables 1 950 2 349

Provision for Credit Losses 569 619

Inventory 4 588 1 987

Provisional tax payments 1 789 1 508

Bank 0 4 916

Cost of sales 9 875 8 290

Loss on sale of Equipment 128 0

Rental expense 1 378 1 312

Depreciation 950 810

Credit Losses 356 450

Administration and distribution expenses 3 892 3 459

Interest on long term loan 301 379

Interest on overdraft 41 0

Company income tax @ 28% 2 223 2 120

Additional Information:

  1. Equipment with a cost price of R 1 500 000 and R 150 000 accumulated depreciation was sold during the year.
  2. New equipment, vehicles and buildings were acquired during the year to facilitate expansion.
  3. On the 30 June 2020, dividends of R 980 000 were declared. This transaction has not yet been processed. The dividends will be paid on the 18 July 2020.
  4. All sales and purchases are made on credit.
  5. Profit before tax was calculated correctly from the information above and is R 7 940 000.

Required:

Q.3.1 Prepare the Statement of Cash Flows of Dovelly Ltd for the year ended 30 June 2020 using the indirect method. (32)

Q.3.2 Define the Going concern principle when preparing the Cash Flow Statement (3)

Q.3.3 Included in administration and distribution expenses is repairs to the boundary fence of the property, for R 380 000, paid in cash. Motivate with reference to the Conceptual Framework, why the repairs to the fence should be recognised as an expense. (10)

Question 4 (Marks: 65)

Velocity Ltd is a clothing company which manufactures and distributes under licence various well‐ known clothing brands.

The following information relates to Velocity Ltd:

Pre‐Adjustment Trial Balance as at 29 February 2020:

Debits Credits

Ordinary Share Capital – 1 March 2019 8 900 000

7% Preference Share Capital – 1 March 2019 1 200 000

Retained Earnings – 1 March 2019 1 890 000

Long term loan: ABN Bank 9% 1 200 000

Investment held for trading 1 500 000

Land and buildings 6 900 000

Equipment 3 879 000

Vehicles 2 890 000

Accumulated depreciation on buildings 480 000

Accumulated depreciation on equipment 885 000

Accumulated depreciation on vehicles 595 000

Inventory 2 919 452

Receivables 4 890 790

Provisional tax Payment (SARS) 420 000

Allowance for credit losses 250 000

Bank 489 090

Payables 5 890 245

SARS (tax payable)

Profit and Loss 2 598 087

Additional Information:

  1. On 5 February 2020, the land was subdivided, and the subdivision sold for R 2 800 000. The transfer for the land took place on 27 February and the money was paid into the bank account. The purchase price of the land, on 1 May 2015 was R 5 000 000. The subdivision sold amounts to one quarter of the original block. No transactions have been recorded for this transaction. The remaining land value must be revalued in accordance with this recent sale price. Depreciation on buildings is calculated at 5% per annum on cost. No changes to the buildings occurred during the financial year. Depreciation was correctly recorded.
  2. During October 2019 additional ordinary shares were issued and the transactions concluded on the 1 November 2019. The proceeds from ordinary shares amounted to R 1 800 000 and will be used during the next financial year for the replacement of equipment. The money received was invested in a 7% fixed deposit at Denbank. No transactions, including interest received, have been recorded for this transaction.
  3. The Investment held for trading was re‐valued on the 25th of February 2020, by an increase of R120 000. No transactions have been recorded.
  4. The long‐term loan from ABN Bank was granted on 1 March 2018 and is repayable over five years, in equal end of month instalments.
  5. On 25 February an ordinary final dividend was declared, R 800 000. No interim dividends were declared or paid in the current financial year. No transactions have been recorded.
  6. Provide for a 28% tax expense on Profit before tax, payable in March 2020.

Required:

Q.4.1 Prepare the Statement of changes in Equity for the year ended 29 February 2020 for Velocity Ltd. The total column is required. (25)

Q.4.2 Prepare the PPE note for the year ended 29 February 2020, showing only Land and Buildings. (15)

Q.4.3 Prepare the Statement of Financial Position as at 29 February 2020 for Velocity Ltd. (25

 

Prepare a cost of goods manufactured statement for March. Round your answers to the nearest dollar.

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  1. Statement of cost of goods manufactured for a manufacturing company

Cost data for Johnstone Manufacturing Company for the month ended March 31 are as follows:

Inventories March 1 March 31
Materials $220,800 $203,030
Work in process 458,310 536,650
Finished goods 616,350 647,570
Direct labor $3,680,000
Materials purchased during March 2,803,310
Factory overhead incurred during March:  
 Indirect labor 336,450
 Machinery depreciation 220,800
 Heat, light, and power 184,000
 Supplies 36,690
 Property taxes 31,540
 Miscellaneous costs 48,050

This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

  1. Prepare a cost of goods manufactured statement for March. Round your answers to the nearest dollar.
Johnstone Manufacturing Company
Statement of Cost of Goods Manufactured
For the Month Ended March 31
Indirect labor Machinery depreciation Supplies Work in process inventory, March 1 $ fill in the blank 3
Direct materials:
 

Machinery depreciation Materials inventory, March 1 Supplies Work in process inventory, March 31

 $ fill in the blank 5
 

Indirect labor Property taxes Purchases Work in process inventory, March 31

 fill in the blank 7
 

Cost of materials available for use Less work in process inventory, March 31 Supplies Work in process inventory, March 1

 $ fill in the blank 9
 

Indirect labor Materials inventory, March 31 Miscellaneous cost Work in process inventory, March 31

 fill in the blank 11
 

Cost of direct materials used in production Less work in process inventory, March 31 Materials inventory, March 1 Total manufacturing costs

 $ fill in the blank 13
Direct labor Indirect labor Machinery depreciation Supplies fill in the blank 15
Factory overhead:
 

Indirect labor Materials inventory, March 1 Materials inventory, March 31 Purchases

 $ fill in the blank 17
 

Direct labor Machinery depreciation Purchases Work in process inventory, March 31

 fill in the blank 19
 

Direct labor Heat, light, and power Materials inventory, March 1 Work in process inventory, March 31

 fill in the blank 21
 

Direct labor Materials inventory, March 1 Purchases Supplies

 fill in the blank 23
 

Materials inventory, March 31 Property taxes Purchases Work in process inventory, March 31

 fill in the blank 25
 

Direct materials Miscellaneous costs Purchases Work in process inventory, March 31

 fill in the blank 27
    Total factory overhead fill in the blank 28
Total manufacturing costs incurred during March fill in the blank 29
Total manufacturing costs $ fill in the blank 30
Cost of materials available for use Direct materials Materials inventory, March 31 Work in process inventory, March 31 fill in the blank 32
Cost of goods manufactured $ fill in the blank 33
  1. Determine the cost of goods sold for March. Round your answer to the nearest dollar.

$fill in the blank 34

Check My Work

 

Prepare the necessary journal entries on amortization for the years ending December 31, 2010 & 2011. In 2012, will Firoz meet any impairment loss? If yes, prepare journal entry to record the impairment loss and amortization entry on 31stDec 2012 .

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Assignment Question(s): (Marks 15)

Q1.A company abandons the historical cost principle and adopts the LCNRV method of valuing inventory. Explain the process of LCNRV (Mark 1)

Abdullah Corporation gives you the following information about its inventory for four different products as on December  31st2020.

Estimated Expected

Product Original Cost Completion Cost Selling Price

A SAR25 SAR10 SAR40

B SAR42 SAR20 SAR58

C SAR120 SAR40 SAR150

D SAR18 SAR5 SAR26

Using the lower-of-cost-or-net realizable value approach applied on an individual-product basis, compute the inventory valuation to be reported for each product on December 31, 2020.    (Marks 2)

 

Q2.a. IFRS requires capitalizing actual interest (with modification) in self-constructed assets. What are the five steps necessary to meet IFRS requirement. (Marks 1)

  1. On November 1, 2020, Saif Company contracted Ahmed Construction Co. to construct a building for SAR 1,600,000 on land costing SAR 400,000 (purchased from the contractor and included in the first payment). Saif  made the following payments to the construction company during 2021.
Date Amount SAR
1st Jan 500,000
1st Mar 400,000
1st  Jun 350,000
1st   Sep 500,000
1st     Dec 250,000

Required: Compute weighted-average accumulated expenditures for 2021 (Marks 2)

 

Q3 Long-lived tangible asset are associated with either depreciations, impairments or depletions. Explain why companies revalue such assets on an annual basis, and give examples on depreciations, impairments and depletions. (Marks 3)

 

Q4. Firoz Corp. obtained a trade name in January 2010, incurring legal costs of SAR15,000. The company amortizes the trade name over 8 years. Firoz, successfully defended its trade name in January 2011, incurring SAR 4,900 in legal fees. At the beginning of 2012, based on new marketing research, Firoz determines that the recoverable amount of the trade name is SAR 12,000.

Required:

  1. Prepare the necessary journal entries on amortization for the years ending December 31, 2010 & 2011. (2 mark)
  2. In 2012, will Firoz meet any impairment loss? If yes, prepare journal entry to record the impairment loss and amortization entry on 31stDec 2012 (2 mark)

Q5. Assume that a Financial Corporation issued SAR 500,000 of 8% term bonds on January 1, 2021, due on January 1, 2026, with interest payable each July 1 and January 1. Investors require an effective-interest rate of 6%.

Note: PV of principal amount at 6% is 0.74409 and PV of semi-annual interest amount at 6% is 8.53020

Required:

  1. Calculate the bond proceeds, and state whether the bond is issued at a premium or discount?  (Marks 1.5)
  2. Pass journal entry to on date of issue, Jan. 1, 2021 (Marks 0.5)

 

 

Provide a description of the relationship you expected to observe in the data, along with screenshots of the visualization results. Clearly identify the part of the visualization that leads you to believe that a specific location/day is an anomaly.

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Project 1: Memo Template I

Souper Bowl Inc.—December 31, 2016 Disaggregated Revenue Analytics

Purpose: The purpose of this memo is to document
[Provide the purpose of the memo]

Data: We obtained a listing of daily sales by location from the client’s IT system. We tested the details for mathematical accuracy, as summarized in the table below:
[Present Table(s)/Graph(s)]

Procedures: Based on our risk assessment process, we identified the following assertions as significant risks related to revenues/sales:
[Create a bulleted list of assertions]
[Provide support for the assertions in the bullet list]

The analytics that we performed are as follows:

• Visualization Analysis #1: Title: [Provide a title]
• [Provide a description of the relationship you expected to observe in the data, along with screenshots of the visualization results. Clearly identify (using circles, arrows, etc.) the part of the visualization that leads you to believe that a specific location/day is an anomaly. Ensure that all tables and graphics are properly labeled (x axis, y axis, etc.)]
• Results:
• [In each of the “Results” sections, include a brief summary of your findings so that your manager can see (in words) the way that you interpret the visualization screenshots.]

• Visualization Analysis #2: Title: [Provide a title]
• Results:
• [The number of analyses that you perform is up to you. Remember that you want to impress your manager, but you also know that the manager’s time is valuable. Therefore, each analysis that you report should offer new information and conclusions (e.g., avoid repeating the same type of analysis with different coloring, shapes, etc., if the conclusions drawn are the same.)]

Conclusion: Based on the procedures described above, the audit team will pull supporting sales information to substantively test transactions from the following
locations and days:
• [This section of the memo can be achieved by using lists or tables, but regardless of the style of presentation, it should clearly describe which item(s) you are recommending that the audit team look into further (based on all the analyses above). For each item, you should reference which analysis # the item comes from. The item should be a specific location on a specific day, or a sample of certain days from a set of observations that exhibit the same unusual trend based on your analyses above (e.g., if you identify an unusual relationship for Q4 for location #1001, but you cannot identify one specific day or set of days that is driving the unusual relationship, you may choose to sample from Q4 instead). Remember that it takes time and resources to test
each selection, so be strategic in your selections and include justification for your decisions in this section of the memo.]

Comment on the ethics exhibited by Amy and the possible consequences of her actions. How does the merchandising company account for the suits that Amy returns?

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Amy Martin is a student who plans to attend approximately four professional events a year at her college. Each event necessitates a financial outlay of $100 to $200 for a new suit and accessories. After incurring a major hit to her savings for the first event, Amy developed a different approach. She buys the suit on credit the week before the eve3nt, wears it to the event, and returns it the next week to the store for a full refund on her charge card.

1.Comment on the ethics exhibited by Amy and the possible consequences of her actions.
2.How does the merchandising company account for the suits that Amy returns? (What journal entries are required?)

What are GAAP? Why are financial statements that have been prepared in accordance with GAAP and audited by an independent CPA useful for Fidelity’s investment analysts? What organizations influence GAAP? Explain how they do so.

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ACCT WK8

Writer instructions – a 750 word paper on the following topic:

Fidelity Investments Company is a well-known mutual fund investment company. It makes investments worth billions of dollars in companies listed on the New York Stock Exchange and other stock markets. Generally accepted accounting principles (GAAP) are very important for Fidelity’s investment analysts.

What are GAAP? Why are financial statements that have been prepared in accordance with GAAP and audited by an independent CPA useful for Fidelity’s investment analysts? What organizations influence GAAP? Explain how they do so.

Your paper must be formatted according to APA 6th edition guidelines, and you need to use at least one external reference.

Write a reflective essay to critically evaluate the usefulness of change management models and recommend one specific model to support the strategic option identified in Task 2.

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Reflective essay

(Reflective essay..you should be a change agent in a car wash, how can you bring change in car wash, how did it effect the car wash..if possible bring in FORCE FIELD ANAYSIS..own words).

Write a reflective essay to critically evaluate the usefulness of change management models and recommend one specific model to support the strategic option identified in Task 2.

You should also explain how you could be a change agent and identify the leadership and change agent skills you would need to display in order to make changes successful.

You should refer to the Indicative Content in the specification to help form your answer.