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Don Russell FINAL
Transcript of Don Russell FINAL
Issues with C&S
Current: ETI Overview
Analysis of Issues
- Don Russell
- President & Management
- Earnings management
(manipulation of numbers)
- No comparable data
- Bad reputation
- Creates a game playing culture
- Potential fraud
- Rapidly growing public communications service company
- Manual processes and many legacy systems
- Did not have the resources needed to cover capital costs for expansion
- National Telephone Corporation (NTC) wanted to acquire ETI
- NTC offered to buy ETI's stock at a large premium over market prices
CFO at Eastern Technology
Aggressive Accounting Practices
Special Guest: Don Russell
Previous: Controller at C&S
- expenses accrued
- auditors negligent
- Earnings management culture
- Unethical reporting
Set up a large reserves account
- $53 million
Who are the main
in these companies?
What is the main reason for the strong company culture of
at the two companies?
Why are the
set by the two companies
What could Don do about the
strategies at ETI?
What should the
of ETI have done?
What were some
that arose at the two companies?
What were the long term
Major system changes
- chart of accounts, new general ledger, AR, AP
- saved company $4 million per year
- No strategy
- Only financial targets
- Culture of earnings management
be the only consideration when setting long term goals?
Would it be considered “okay” if
to do it?
If your superior asked you to do a similar task, would you do it?
position of power
affect the use of these aggressive accounting systems?
Do you agree with the auditors choice of an
Do you think the auditors did the best to their abilities despite the gap in