Case Study – Dell Computer

CH10 Case 7-5 Dell Computer You are being asked to answer the three (3) questions associated with Case 7-5 which can be found in syllabus chapter 10 of your text on page 503 which discusses Earnings Management. After reading the chapter, please read the case in your text book and answer the following questions associated with Dell Computer. To give you an idea about the issues in the Dell Computer case study, the questions have been included at the end of this assignment. In addition, you are being asked to answer a fourth question regarding “Cookie-Jar Reserves”. In answering the questions, a good practice is to identify and discuss the issue as this way the reader clearly understands what the issue and then answer the question while including supporting references which support your position. Assignment Requirements: -Your answer for the entire assignment (the four questions combined) should be between 1,000 and 1,500 words. -I will be looking for you answer to be written in an organized manner exhibiting proper grammar and good sentence structure so please keep that in mind. -Tables and such, if properly referenced, may not be considered plagiarism, however that is not the case with written narrative.  -Please reference your sources as appropriate. ***** the case study in full I have attached in files but here are the questions: Case 7-5 Dell Computer: In his analysis of the Dell fraud for Forbes, Edward Hess comments: “Too often, the market’s maniacal focus on creating ever-increasing quarterly earnings drives bad corporate behavior, as it apparently did at Dell. That behavior produces non-authentic earnings that obscure what is really happening in the business. Short-termism can result in a range of corporate and financial games that may enrich management at the expense of market integrity and efficient investor capital allocation.” Comment on Hess’s statement from two (2) perspectives: earnings management and financial analysts earnings projections. Explain the difference between financial statement fraud and disclosure fraud. How did Dell use each one to produce materially misstated financial results? Do you agree with the court opinion that PwC did not act with fraudulent intent, therefore, not holding it legally liable? How can fraudulent intent be established in a case like Dell? Support your conclusions. In addition, Dell used “cookie-jar reserves” to inflate income and “make the numbers” Wall Street wanted to see. Discuss and describe cookie-jar reserves and the ethical implications.