Case 6-5 Knowledge Ware, Inc.
1. Explain why revenue recognition rules were violated based on the facts of the case. How do such violations relate to the standards for legal liability under the securities acts?
2. Gossett and Fontaine are CPAs. Given the charges against them and settlement with the SEC, how did their actions violate provisions of the AICPA Code of Professional Conduct?
3. When the KnowledgeWare story of fraud broke in the press, many Viking fans and lifelong football fans of Tarkenton acted in disbelief stating that there had to be a mistake. After all, Tarkenton was their football hero for many years. Should we hold athletes to the same ethical standards as other people (a) in their chosen profession and (b) in their personal lives? Compare the reaction of Vikings fans to the public reaction after hearing about the sexual liaisons of Tiger Woods. are these comparable situations?