Condominium Townhouse Investment

This accounting case involves the evaluation of various alternatives based on a real‐life personal property investment. The Condominium Townhouse Investment (CTI) case uses introductory management accounting concepts and analyses to introduce students to the case method of learning. The main concepts reinforced are relevant costs and revenues, including differentiating between opportunity and sunk costs. Students are not only asked to define and identify these items, but to consider choices centered on the decision alternatives in their role as accountants in public practice. This case is especially valuable because it offers students the chance to become engaged in an analysis and decision‐making situation that they can relate to both personally and professionally because, one day, they themselves are likely to become involved in a home ownership decision. The case focuses on real estate as a personal business investment, and requires both qualitative and quantitative analysis, with more emphasis on the qualitative aspect. In addition, the teaching notes include methods and strategies for students to use in an introductory managerial accounting class or level‐1 MBA class.     

Home Capital Group—The High Cost of Dishonesty

This instructional case presents the problems that began in the summer of 2015 when Home Capital Group (HCG) announced it had cut ties with 45 mortgage brokers for falsifying figures on mortgage applications regarding the earnings of prospective home purchasers in Canada. The case details the subsequent investigation by the Ontario Securities Commission in 2017 that resulted in a run on the bank and consequent efforts by HCG to stay afloat. While emphasizing the importance of strong corporate governance and corporate social responsibility initiatives, this case also stresses the influence of various stakeholders including short‐sellers, regulators, shareholders, management, depositors, and customers in the evolution of subsequent events. As a whole, this case provides an interesting context for the discussion of stock market efficiency.     

To Tip or Not to Tip,That Is the Question: Rewarding Customer Service Encounters

This instructional case deals with compensation schemes in service industries, specifically with managerial intervention in tipping schemes in a restaurant. The case provides an opportunity to explore the interaction of direct client feedback and management control systems in controlling service encounters and to develop an understanding of management control systems in a team production environment. While the case focuses on compensation issues and requires some quantitative analysis, it also provides an opportunity to introduce the concept of “management controls as a package” and an assessment of the linkage between organizational strategy and the overall package of management controls. Case guidance is provided for alternative approaches to using the case.     

Dory & Nemo Early Learning Center

The case requires students to evaluate the current situation and growth options of a small business, Dory & Nemo Early Learning Center (D&N), which provides intergenerational programming to preschool children at a retirement home. The learning center was opened in September 2014, and it was able to make a small profit each year. However, it is projected that there would be a 75 percent decrease in net income from $8,072 in Fiscal 2016 to $1,819 in Fiscal 2017. Davis and Nathans, business partners of D&N, met to discuss the following growth options: (i) Mosaic Retirement Residences' proposal to set up two learning centers at their retirement homes each year for a total of six in three years and (ii) Harmony Retirement Residences' proposal for leasing space to set up learning centers at their retirement homes, one new learning center a year for a total of three in three years. Furthermore, Davis and Nathans had decided to increase the program fee from $320 to $350 per week for the 2017–18 academic session in September. They would also like to reduce their workload from 50 to 40 hours per week, increase their vacation time from two to three weeks, and increase their salaries and bonuses. Students must consider personal objectives of business partners and mission of D&N in the analysis. They learn to identify relevant information for decision making, apply appropriate analytical tools for quantitative analysis, integrate qualitative and quantitative factors in decision making, and make recommendations consistent with analysis.     

Assembly FG: An Educational Case on MRP II Integrated within ERP

This case teaches students how discrete (job order) manufacturing companies use Manufacturing Resource Planning (MRP II) within Enterprise Resource Planning (ERP) systems to plan purchase orders for direct materials and shop orders for work‐in‐process and finished goods. Students simulate MRP II integrated within ERP, using Microsoft Excel to learn MRP II's bill‐of‐materials (BOM) Explosion that plans order quantities and MRP II's scheduling logic that uses lead‐times to determine start dates for planned orders. Students explain why MRP II is most practical and effective when executed within ERP and how MRP II can reduce excess inventories, prevent inventory shortages, and help companies deliver quality products to customers on schedule. Also, students explain why BOM, inventory, and lead‐time inaccuracies can adversely affect the accuracy of MRP II‐planned replenishments and identify controls that reduce the risks of these inaccuracies.     

Warning Lights on the Dashboard

Many businesses operate legally while pushing the ethical values of society. This case follows the actions of a manager who uses particular metrics to improve his business at the cost of increasing the community's ethical concerns. The objectives of the case are to have students recognize ethical concerns arising from the metrics, assess how these impact business strategy, propose improvements while understanding the ethically sensitive environment in which the business operates, and devise an effective approach to persuade others to implement proposed changes. This case demonstrates to students the complexity of many ethical issues in business and challenges them to consider the interaction between ethical boundaries and a profitable corporate strategy. It highlights the importance of ensuring that both qualitative—here, ethical—and quantitative considerations are incorporated in any management accounting decision‐making tool.     

Viasystems Group,inc.

Viasystems Group, Inc. (Viasystems) is an international supplier of electromechanical assemblies and components. It specializes in manufacturing printed circuits and assembling electric cables and industrial metal cabinets. The case concerns the Printed Circuit Division at Viasystems and its need to adapt its costing system to the relocation of its manufacturing activities to China under its strategic planning, begun in 2001. Planning and controlling operating costs and the presentation of the financial statements have therefore become major issues. The case is set in 2006, six years after the start of progressive offshoring of manufacturing to China. It describes: 1) how external environmental pressures and the need for profitability have led to a critical strategic decision; and 2) how this new business model has changed upper management's informational needs, leading them to rethink their costing system, particularly at the Chinese plants. Setting the case in 2006, when all the plants have been relocated to China, enables discussions of the challenges that management will have to cope with in the future, after the operations transfer has been completed and the consequences on the management control system.     

Homewonder Ltd: Shareholders Versus Other Stakeholders

Corporate social responsibility involves various economic and social issues. This case presents a dilemma of the trade‐off between economic benefits to shareholders and social benefits to other stakeholders. To respond to recent flat sales growth, as well as serious needs for cost reduction and meeting analysts' expectations, Homewonder Manufacturing Ltd. is considering a strategic plan to expand into Asia. To facilitate this plan, the CEO of the company proposed offshoring and outsourcing some business operations, as well as downsizing the company's current social programs. Various stakeholders will be affected by this plan. This case analysis requires an integration of the shareholder and stakeholder theories of the firm. It provides opportunities for students to consider whether relationships with other stakeholders are a salient corporate strategic concern, and perform costs and benefits analyses arising from this dilemma.     

The Credibility of Earnings Forecasts in IPO Prospectuses and Underpricing

This paper provides empirical evidence of the impact of the voluntary disclosure of management earnings forecasts in IPO prospectuses and of the credibility of these forecasts, as perceived by investors at the time of the IPO. We measure forecast credibility ex ante with two approaches: (i) a vector of determinants of credibility that are observable by market participants at the time of the issue and (ii) the predicted value of the forecast error based on some of these determinants. Controlling for the firm's decision on whether or not to issue a forecast, we find that the issue of a forecast reduces underpricing. We find that the quality of the firm's governance and of the auditor and underwriter associated with the issue seems to act as a substitute to the disclosure of an earnings forecast in the prospectus, so that they significantly decrease the level of underpricing only for non‐forecasters. However, despite our various approaches to measure ex ante credibility, we find no association between the pricing of the issue and perceived forecast credibility at the time of the IPO.     

Depreciation in the Canadian Airline Industry

This case is designed to help students enhance their analytical skills and link accounting policy choices with corporate strategy. Written initially for MBA students and senior analysts attending executive education sessions, it provides participants with 1) industry background for the Canadian airline sector, and 2) historical and selected financial and non‐financial information from the annual reports and initial public offering documents of three players in this industry. Participants are invited to reflect on the theoretical and practical reasons underlying the choice of a depreciation method by airline companies, to find ways to quantitatively compare companies that use different depreciation methods, and to link these policy choices to possible strategic considerations. This case is based on a unique situation prevailing in 2009 where financial information was available for all three airlines which were using different approaches for aircraft depreciation.     

Halifax Henna: The Art of Manageable Growth*

This case explores the dilemma many young women face when they begin a family: juggling a full‐time job as a young Chartered Professional Accountant (CPA) with a government job, continuing to grow a small business as a henna artist, and caring for a new baby. Even before the arrival of the first child, the combination of continuing to do both jobs was not sustainable. The case provides information to enable students to assess the financial health of a small business and provides a recommendation to the owner. In addition, information regarding paying childcare costs while continuing with a government job provides a realistic comparison for students. Often students jump to the money, which is currently in her accounting job, and forget that passion, dreams, and objectives for work–life balance, although earning less at the moment due to the part‐time nature, may be the best way forward.     

The Effect of Reversibility on a Manager's Decision to Record Asset Impairments

Over time, accounting standards have moved toward presenting more items at fair value on the balance sheet. Consistent with this trend, IAS No. 36 permits an impairment loss on a long‐lived asset to be reversed if the economic value of the asset recovers. This article uses empirical data from an experiment conducted with 118 managers to explore the implication of allowing impairment reversals on a manager's decision to record the loss. Results suggest that permitting reversals significantly increases the likelihood that a manager will record the impairment, especially if the manager has a bonus plan. The bonus plan effect is not caused by the manager's intention to smooth income through impairment reversals, but by his disutility from a bonus forgone if the value of the asset recovers but accounting rules prohibit him from reversing the loss.     

Paper and Hill: An In‐Class Corporate Governance Case

Corporate governance is a set of rules and processes that help ensure that firms are effectively run for the benefit of their stakeholders. Good corporate governance is predicated on having directors fulfill their fiduciary duties while acting as stewards of the corporation. The fact that good corporate governance is essential to a well‐functioning and prosperous society is reflected in CPA Canada's Strategy and Governance competency. Unfortunately, there are few in‐class Canadian corporate governance cases that instructors can use to help accounting students improve their understanding of these three fundamental governance concepts: director duty of care, director duty of loyalty, and the business judgment rule. This Canadian corporate governance case is based on the actual events regarding the approval of Steven Hill's employment contract as the Chair of Paper Enterprises Inc. The case is presented using PowerPoint slides, rather than in a traditional narrative format, as it intended to be used as an in‐class case that does not require advance student preparation.     

Is Polaris a HOG? A Case Study*

The main usefulness of a general purpose financial statement centers on its comparability to the financials produced by an entity's competition. This case works for both undergraduate and graduate students because it offers comparisons between two well known recreation industry companies. Financial statement analysis is a lesson which serves as an appropriate capstone to financial accounting education. Analyzing the financial statements of competing entities explains “why” accountants must implement the intricate “how” which produces the statements and the resulting decision models such as ratios and common‐sized statements. Compared to previous generations, current students will be more responsible for managing their own retirement funds. This case can help students start to appreciate investment analysis by providing enough detail for any level student to conduct financial statement evaluations that make comparisons to find successful fundamental business strategies.     

Boxing and Martial Arts Company,A Tax Case

A tax case is developed examining a private Canadian sports company. This case simulates a real‐world start‐up company in the area of Canadian Controlled Private Corporation taxation. The client, Boxing and Martial Arts Co., is a medium‐sized, rapidly growing sports promotion business. It operates in an environment where cash payments are common, especially towards foreign workers. Students must research issues involving tax deductions and revenue recognition. The learning objectives include: reinforcing taxation concepts that most students learn in introductory courses (i.e., revenue recognition, allowable business expenses) as well as improving students’ tax research skills for more complex issues (e.g., international tax treaties).     

The quality improvement customers didn't want

Is investing in new technology always the right choice for a company and its customers? Allan Moulter, the CEO of Quality Care, isn't sure he wants to invest in the computerized reception system that consultant Jack Zadow has outlined for him. But in this HBR case study, the argument Zadow makes is impossible to ignore. Quality Care's rivals have invested in similar systems or are planning to do so. The new system promises to take care of routine busywork, freeing staff up for other interactions with patients. It seems as if the competition hasn't even cut staff and is counting on increased customer retention to pay for the investment. And yet, Quality Care's surveys of its own customers show that they prefer the human touch when checking in. How would customers feel if the first ?person? they met when they came in the door turned out to be a machine? Moulter prides himself on his responsiveness to customers. And with 86% of Quality Care's customers either satisfied or completely satisfied, aren't things fine as they are? Has Moulter considered all the facets of his predicament? How will Quality Care's staff be affected by a decision one way or another? What about the costs of upgrading the system? Can Quality Care maintain its standing without going high-tech? Would customers rebel when confronted with the proposed reception area or would they appreciate the increased efficiency? Six experts weigh the costs and benefits of technology in a service industry.     

Eine goldene Regel für die Modellierung von Daten zur Erstellung von Data-Mining-Klassifikationsmodellen unter besonderer Berücksichtigung von Problemstellungen in der Versicherungswirtschaft

A golden rule for data modelling for data mining classification models with special considerations of problems in insurances. To create classification models to avoid contract cancellations and for cross selling purposes to be used in marketing and sales of insurance companies the necessary data modelling will be discussed. Starting from a binary classification variable — cancelled contracts and active contracts, customers of a branch and non-customers of a branch — we in particular focus on the importance of historical data: To be able to detect decision patterns for cancellations respectively for new contracts in the data with the help of data mining tools, it is necessary for such contracts respectively customers not to use actual data, but data as they were at the time of decision. This obvious, but rarely used principle, is presented in detail as a golden rule for correct data modelling in such situations. As a case study a project and results for nine branches in each case of the Gothaer Versicherungen is presented.     

Entebbe Ltd.: A Tax Case

This case is designed to integrate two major tax issues—wind‐up of a company versus sale of shares—with business valuations. Thus, it is designed to incorporate key tax and finance CPA competency areas. There are two valuations required in this case. One is the valuation of shares; the other is the valuation of an intangible asset (a patent). Students have to recognize that before they can decide whether a wind‐up or sale of shares is preferred, they first need to determine the fair market value (FMV) of the shares. However, to determine the FMV of the shares, the valuation of a patent must be done first, as its value will impact the FMV of the shares. Thus, this case requires students to sequence their analysis. Residency issues (“departure tax”) upon leaving Canada permanently are also indirectly identified in the case.     

Managing Revenue and Costs to Implement Strategy: The Conference Organizer's Dilemma

This instructional case describes a situation in which revenues include both a fixed and variable component. The situation illustrated is common among nonprofits that have sponsor/donor revenues as well as client‐service revenues. The case provides students with an opportunity to explore cost–volume–profit relationships in greater depth than usual textbook illustrations and reinforces their understanding of the important link between revenues, costs and activities, and how all these relationships connect to strategy.     

A Balanced Scorecard for Maple Leaf Consulting

Maple Leaf Consulting is the disguised name for an actual medium‐sized international engineering and environmental consulting firm. In its 35 years of operations, the firm has grown from a single 10‐person office in Canada to more than 3,000 employees worldwide. Despite the growth from providing only specialized geotechnical engineering to many related technical specializations, the firm retained its nonbureaucratic orientation. Now, while emphasizing innovative world‐class technical knowledge, the fictional firm must resolve a series of organizational transition issues, which the actual firm did through the use of the balanced scorecard. The purpose of this case is for students to develop a preliminary balanced scorecard with appropriate measures.