Assignment

Scenario

You are a first year staff person working with a multidiscipline team to report on a potential company your firm is considering to invest in. The president of your company will review your team's written report. As the financial accounting expert on the team, your part of the project is to research, analyze, and report on components related to financial statements, footnotes, and background information. You must report on your analysis in a way that your non-accounting team members and your firm's president will understand.

The team is considering this to be a professional paper and has stated that bullet points, graphs and tables are not to be utilized. In addition, the president of your company is looking for the insight and expertise of his team and does not "want to pay for you to cut and paste other people's work." You are to keep direct citations to a minimum. Your report must include a conclusion that determines whether or not your firm's investment in this company's stock is a good move for your firm.

Your Task

You will be assigned a specific company to research and a footnote topic from that company's financial statements.

1. Research

a. SEC filings related to your assigned company and earnings call and

Identify information that might indicate potential risks or success.

b. FASB ASC Codification and

Apply information to a company footnote.

c. Company's most recent 10K, proxy statement, subsequent 10-Qs and 8-Ks for the last 6 months, and news articles and

Explain key business events that relate to the filings.

2. Complete the company information table.

3. Write a 3 to 5-page narrative on your findings. See the Step-by-Step Guidelines (page 4).

(The cover page, company information table, reference page, and appendix are not included in the 3 to 5-page narrative length. Narratives greater or less than the 3 to 5 page limit will receive a deduction of 10 points per page.)

Format

Carefully examine the format template provided in our course on Blackboard. Include all the sections in the template in your paper. Failure to follow all the template guidelines will result in point deductions. The format for the paper must be double spaced, 8.5"x11" letter sized, Times New Roman, 12 font, 1 inch margins on all four sides, and numbered pages in the header.

Research Resources

• Required Resources

o Financial Accounting Standards Board, Accounting Standards Codification (FASB)

Review pages v. - 30 of the FASB Learning Guide posted in eLearning or available online. The Guide is also available after logging on to the FASB homepage. Access FASB through:

- Academic Login Link: http://aaahq.org/ascLogin.cfm
- Login information available in Blackboard

o Sec.gov EDGAR database

Locate the most recent filings for your assigned company filed prior to the date of the assignment. Access EDGAR on the internet at www.sec.gov. Some information might be available from other sources. However, if there is a difference between other sources and the SEC filings, the SEC filings are considered most accurate. You are to provide exact numbers (not rounded to the nearest thousands or millions). Needed filing:

- Most recent 10K (filed prior to date of assignment)
- DEF 14A (most recent proxy statement filed prior to date of assignment - if not available, use prior year)
- 8K filings for the last 6 months

o Assigned company's investor relations website
o Most recent company's earnings call recording (or transcript if recording not available)

• Additional Authorized Research Resources (however you should not cite or quote them)

o News articles from reliable sources (Wikipedia is not a reliable source.)
o Accounting textbooks
o Big 4 Accounting Guides/summaries

• Unauthorized Resources include, but are not limited to the following:

o Prior or current semester students and/or their completed projects
o Projects submitted for credit in any other course

• The usage of unauthorized resources will result in referral to the Judicial Affa

Citing Sources

FASB is cited differently than 10-Ks and company websites.

Long portions of quoted source material will result in point deductions.

Failure to properly cite, paraphrase your sources (plagiarism) or use only authorized resources, will result in a referral to the Judicial Affairs. Collusion will also result in a referral to Judicial Affairs. JA sanctions may include, but are not necessarily limited to, revision of the assignment, a zero on the assignment, a zero in the course, required tutorials, academic probation, restrictions on registering for classes, and/or expulsion from the university.

Step-by Step Project Guide Possible Points

Format and Cover Page

Follow the format template! As this is a narrative discussion, no graphs, tables, or bulleted lists are allowed. Proper grammar and appropriate business language is required. 10

Company Information Table

Table is available in this semester's Template posted in eLearning.

• Use the most recently filed 10K and DEF 14A (proxy) as of the date specified in the assignment.
• Use the earnings call related to your 10K; if no longer available, use a more recent earnings call.
• You may need to use other publically available information for some items.
• Do not add or delete rows or columns to the Table.
• Complete all the fields in the Table. 25

Understand the Business

Review the most recent (as of the assignment date) 10K, Proxy statement and 8-Ks for the last 6 months.

• Describe the nature of the company's business and how it makes money.
• Describe (through 8Ks) key business events that supplement the filings. Relate specific filings connected to news articles.
• Do not provide an update on quarterly earnings and financial statement accounts - just key business events.
• Describe the primary competitors for your assigned company by name. 10

Assigned Footnote, Relevant Portions of Financials and ASC

Apply ASC information to a company footnote. Answer "Why did the company disclosure this information?"

• Identify where in the filing your assigned footnote is addressed and where this requirement is coming from.

• Identify the ASC section(s) that address your footnote and describe the key areas of those sections that pertain to and/or support the accounting treatment used by your assigned company. (Only include the title of the section, do not cut and pasted codification text.)

• Explain why the company disclosed this footnote and how the disclosure complies with ASC. (Don't just summarize ASC and the footnote - identify the linkages between the ASC and what the company actually disclosed in the footnote.

• Explain the risks associated with the footnote and management judgements.

• Support the ASC concepts with a minimum of 3 examples from your footnote to show that you understand ASC and the company's financial statements.

• Explain the risks associated with the footnote and management judgements. 20

Accounting Alternatives, Industry Standards, Future Impact

• Identify related alternative accounting treatments in GAAP.

• Determine if your company differs from its competitors in its treatment of industry standards.

• Describe the future impact of the company's decisions.

• Identify any new or proposed regulations regarding the topic of this footnote. 10

Earnings Call and Non-GAAP Measures Information

Listen to the most recent earnings call on the company's investor relations website (including the Q&A at the end) and review the most recent 10K filed prior to the assignment date.

• Identify any items directly impacting your footnote from the earnings call.

• Identify the key area of concern in the earnings call (may not be related to your footnote).

• Identify management's earnings guidance or discussion of differences.

• Identify any non-GAAP metrics and proforma numbers included in either the earnings call and/or the 10K. Describe specifically what additional information management is trying to convey by using these. 10

Recommendation(s)

The purpose of research is to reach a conclusion.

• Based on all the information you obtained, identify which area of research provided the most useful information for you in your analysis.

• Provide a recommendation to management as to whether or not a future investment in this company's stock would be recommended. 10

Appendix - Provide references for items used in your project (including 10K and Proxy). Include screen prints of your assigned footnote and FASB ASC sections in an Appendix. The Appendix does not count towards the 3-5 page length.