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NORTEL NETWORKS CORPORATION*
ETHICAL MISSTEPS
Linda A. Robinson
Centre for Accounting Ethics
School of Accountancy
University of Waterloo
Waterloo ON N2L 3G1
June 2005
* This case has been developed from publicly available information solely for discussion
purposes and does not purport to be a complete and accurate recounting of all relevant
facts, events and conditions.
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Acknowledgment:
I would like to thank Efrim Boritz, Allan Foerster and Alister Mason
for their helpful comments on this case
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NORTEL NETWORKS CORPORATION
Learning Objectives
This case is designed for use in an ethics, auditing or corporate governance course.
Through the case, students are encouraged to consider how a corporation once considered
a Canadian jewel could lose its way ethically.
Background
It has been a long road that brought Nortel Networks Corporation (“Nortel”) to its present
state. Northern Telecom, known as Northern Electric until 1976, was at one time a
wholly owned subsidiary of Bell Canada. By the mid 1980’s Northern Telecom was the
second largest supplier of telecommunications equipment, largely electronic telephone
switches, in North America. Northern Telecom expanded worldwide firstly into Asia
then Europe, followed by Latin America. In 1995 Northern Telecom shortens its name to
Nortel. Bell Canada, later known as BCE, divested its interest in Northern Telecom
throughout the 1970’s owning just over 50 percent by 1980. Finally in 2000, BCE
distributed its remaining ownership interest in Nortel to the shareholders of BCE.
Not only was Nortel a telecommunications company, it was a major research
powerhouse, receiving substantial support from provincial and national governments.
The bulk of Nortel’s R&D was done in Canada to take advantage of generous R & D tax
incentives.
Nortel, despite its large size, international shareholders and global reach, was still a
“Canadian” company, with the majority of its management and board of directors’
Canadian citizens.
It was John Roth (“Roth”) CEO who took Nortel from traditional telephone technology to
the Internet.1 Nortel equipment carried 75 percent of the North American Internet traffic
in the late 1990’s. The company’s growth was due to both the explosion in the Internet
market and through acquisitions. In 2000 alone, Nortel acquired 11 companies at a cost
of US$19.7 billion. By 1998, Nortel was Canada’s largest telecommunication company
with 73,000 employees and revenues of US$22 billion.2
The bubble burst when Nortel’s customers stopped buying telecom equipment in the
great high-tech bust in 2001. As the industry imploded, Nortel seemed the most secure,
until it announced huge declines in prospective sales.
1 CBC.CA News Nortel: Canada’s Tech Giant, May 2, 2005
2 CBC.CA News Nort ...
Principles of ethics and responsibilities.pdfsdfghj21
Nortel Networks Corporation (Nortel) was once Canada's largest telecommunications company, but faced financial troubles in the early 2000s. To meet internal earnings targets and trigger bonus payments, Nortel's senior management, including the CEO, CFO, and Controller, manipulated the company's financial reserves from 2002-2003 by improperly creating and releasing reserves to turn losses into profits. An investigation found Nortel's tone from top management conveyed a message that earnings targets had to be met by any means, and internal controls were weak. As a result, 10 employees were fired for cause and others had to repay bonuses.
Nortel Networks Corp was involved in one of the largest accounting fraud scandals in Canadian history. In the early 2000s, Nortel was struggling financially but senior executives manipulated accounting reserves to falsely report profits, allowing them to receive large bonuses. The SEC and RCMP investigated and charged four former Nortel executives with fraud. Risk factors that allowed the fraud included incentives for executives to commit fraud to receive bonuses, opportunities to manipulate financial reports without detection, and an overly aggressive corporate culture tolerant of improper behavior. The fraud ultimately led to Nortel's bankruptcy and widespread losses for shareholders, employees and pension funds.
535Case StudyNortel The Rise and Fall of a Telecommu.docxaryan532920
535
Case Study
Nortel: The Rise and Fall of a
Telecommunications Company1
By Timothy Fogarty, Michel L. Magnan, Garen Markarian Timothy Fogarty is
a professor of taxation and business law at the Weatherhead School of Management,
Case Western University. His research interests are in behavioral accounting, audit-
ing, and tax. Contact: [email protected]
Michel L. Magnan is a professor of accountancy at the John Molson School
of Business, Concordia University, Montreal, Canada. His research interests are in
corporate governance, fi nancial reporting, and executive compensation. Contact:
[email protected]
Garen Markarian is an assistant professor of accounting at IE Business School,
IE University, Madrid, Spain. His research interests are in fi nancial accounting, exec-
utive compensation, and behavioral accounting. Contact: [email protected]
Overview
This case study presents an in-depth examination of Nortel Networks Corpora-
tion, a major Canadian player in the telecommunication boom of the 1990s. The
case assesses Nortel’s rise, as well as its sudden and precipitous decline, early in the
twenty-fi rst century. More specifi cally, the case investigates if and how four aspects
of the fi rm’s governance contributed to its downfall: (1) governance structure at the
board level, (2) executive compensation, (3) ownership structure, and (4) earnings
management.
Nortel’s Steep Rise and Fall
At its peak, Nortel was a giant corporation. In July 2000, at the height of its success,
with a market capitalization in excess of $350 billion Canadian dollars, Nortel ac-
counted for more than 37 percent of the Toronto Stock Exchange Composite Index
value and ranked among the largest fi rms in the world.2 As a diversifi ed company
focused primarily on telecommunications, Nortel seemed invincible. Commentators
were pleased with its “strength across the board in its product markets” and its fo-
cus on the fastest-growing wireless and broadband communication segments.3
Nortel’s particular expertise—in wireless and broadband communications—
allowed it to post impressive revenue gains in product segments where it was a
cs13.indd 535cs13.indd 535 18/08/11 7:03 PM18/08/11 7:03 PM
536 CASE STUDY Nortel: The Rise and Fall of a Telecommunications Company
relative newcomer. Nortel seemed poised to exploit new Internet technologies and
an expected wave of international deregulation in this sphere. Using an aggressive
acquisition strategy, Nortel grew quickly and well beyond North America. As a re-
sult, analysts praised what they perceived to be “solid, sustainable growth” from
large R&D expenditures fuelling a “perpetual surpassing” of earnings expectations.4
Nortel’s share price more than tripled in four years. By mid-2000, it reached a peak
of more than CAN $200 per share.5
Starting from a strategy of being in every high-growth area in telecommunica-
tions, and benefi tting from tailwinds due to regulatory and market conditions, N ...
World com || Auditing and Corporate Governance Mohit Chhabra
WorldCom began as a small telecom company in 1983 and grew rapidly through acquisitions in the 1990s, becoming the second largest long-distance carrier in the US. However, oversupply in the telecom industry and failed mergers led to declining revenues. To hide this, WorldCom fraudulently reported $11 billion in line costs as capital expenditures from 1999-2002. When auditors discovered the fraud in 2002, WorldCom filed for the largest bankruptcy in US history at the time. The CEO and CFO were later convicted of fraud and accounting violations.
The document summarizes the rise and fall of telecommunications company WorldCom. It traces WorldCom's history from its founding in 1983 as a small long distance provider to becoming the second largest telecom company by 1998 after acquiring over 30 other companies. However, to meet Wall Street expectations and cover losses, WorldCom fraudulently reported billions in line costs as capital expenditures between 2000-2002. When the SEC investigated suspicious financial reports, WorldCom admitted to the $3.8 billion accounting fraud, causing its stock price to plummet and filing for Chapter 11 bankruptcy.
WorldCom started as a small long distance provider in 1983 and grew rapidly through acquisitions to become the second largest telecom company by 1998. However, falling revenues due to the dot-com bust and merger failures led to huge pressure to meet Wall Street expectations. WorldCom's leaders, including CEO Ebbers, resorted to fraudulent accounting by misclassifying operating expenses as capital expenditures, hiding $3.8 billion in losses. An internal audit uncovered the fraud in 2002, leading to WorldCom filing for bankruptcy, destroying $180 billion in shareholder value and costing 57,000 employees their jobs. Ebbers and other executives faced legal consequences for their role in the massive accounting scandal.
Duke Energy reported lower earnings in Q1 2004 compared to Q1 2003. Earnings per share were $0.36 compared to $0.25 the prior year. Ongoing earnings per share excluding special items were $0.32 compared to $0.42. Several business units experienced lower earnings including Franchised Electric, Natural Gas Transmission and Duke Energy North America which was impacted by mark-to-market losses. However, Field Services more than doubled its earnings and the company exceeded its asset sales target for the year.
The document provides an overview of the collapse of Enron through a literature review and analysis of Enron's financial statements. It discusses how Enron rapidly grew through acquisitions but also took on large amounts of debt through special purpose entities. The financial analysis shows abnormalities like exponential revenue and asset growth but negative cash flows and dividends. The theoretical analysis examines how Enron failed its stakeholders like employees, the community, and auditors. Enron had close ties with government officials but its board failed in oversight as the company collapsed.
Principles of ethics and responsibilities.pdfsdfghj21
Nortel Networks Corporation (Nortel) was once Canada's largest telecommunications company, but faced financial troubles in the early 2000s. To meet internal earnings targets and trigger bonus payments, Nortel's senior management, including the CEO, CFO, and Controller, manipulated the company's financial reserves from 2002-2003 by improperly creating and releasing reserves to turn losses into profits. An investigation found Nortel's tone from top management conveyed a message that earnings targets had to be met by any means, and internal controls were weak. As a result, 10 employees were fired for cause and others had to repay bonuses.
Nortel Networks Corp was involved in one of the largest accounting fraud scandals in Canadian history. In the early 2000s, Nortel was struggling financially but senior executives manipulated accounting reserves to falsely report profits, allowing them to receive large bonuses. The SEC and RCMP investigated and charged four former Nortel executives with fraud. Risk factors that allowed the fraud included incentives for executives to commit fraud to receive bonuses, opportunities to manipulate financial reports without detection, and an overly aggressive corporate culture tolerant of improper behavior. The fraud ultimately led to Nortel's bankruptcy and widespread losses for shareholders, employees and pension funds.
535Case StudyNortel The Rise and Fall of a Telecommu.docxaryan532920
535
Case Study
Nortel: The Rise and Fall of a
Telecommunications Company1
By Timothy Fogarty, Michel L. Magnan, Garen Markarian Timothy Fogarty is
a professor of taxation and business law at the Weatherhead School of Management,
Case Western University. His research interests are in behavioral accounting, audit-
ing, and tax. Contact: [email protected]
Michel L. Magnan is a professor of accountancy at the John Molson School
of Business, Concordia University, Montreal, Canada. His research interests are in
corporate governance, fi nancial reporting, and executive compensation. Contact:
[email protected]
Garen Markarian is an assistant professor of accounting at IE Business School,
IE University, Madrid, Spain. His research interests are in fi nancial accounting, exec-
utive compensation, and behavioral accounting. Contact: [email protected]
Overview
This case study presents an in-depth examination of Nortel Networks Corpora-
tion, a major Canadian player in the telecommunication boom of the 1990s. The
case assesses Nortel’s rise, as well as its sudden and precipitous decline, early in the
twenty-fi rst century. More specifi cally, the case investigates if and how four aspects
of the fi rm’s governance contributed to its downfall: (1) governance structure at the
board level, (2) executive compensation, (3) ownership structure, and (4) earnings
management.
Nortel’s Steep Rise and Fall
At its peak, Nortel was a giant corporation. In July 2000, at the height of its success,
with a market capitalization in excess of $350 billion Canadian dollars, Nortel ac-
counted for more than 37 percent of the Toronto Stock Exchange Composite Index
value and ranked among the largest fi rms in the world.2 As a diversifi ed company
focused primarily on telecommunications, Nortel seemed invincible. Commentators
were pleased with its “strength across the board in its product markets” and its fo-
cus on the fastest-growing wireless and broadband communication segments.3
Nortel’s particular expertise—in wireless and broadband communications—
allowed it to post impressive revenue gains in product segments where it was a
cs13.indd 535cs13.indd 535 18/08/11 7:03 PM18/08/11 7:03 PM
536 CASE STUDY Nortel: The Rise and Fall of a Telecommunications Company
relative newcomer. Nortel seemed poised to exploit new Internet technologies and
an expected wave of international deregulation in this sphere. Using an aggressive
acquisition strategy, Nortel grew quickly and well beyond North America. As a re-
sult, analysts praised what they perceived to be “solid, sustainable growth” from
large R&D expenditures fuelling a “perpetual surpassing” of earnings expectations.4
Nortel’s share price more than tripled in four years. By mid-2000, it reached a peak
of more than CAN $200 per share.5
Starting from a strategy of being in every high-growth area in telecommunica-
tions, and benefi tting from tailwinds due to regulatory and market conditions, N ...
World com || Auditing and Corporate Governance Mohit Chhabra
WorldCom began as a small telecom company in 1983 and grew rapidly through acquisitions in the 1990s, becoming the second largest long-distance carrier in the US. However, oversupply in the telecom industry and failed mergers led to declining revenues. To hide this, WorldCom fraudulently reported $11 billion in line costs as capital expenditures from 1999-2002. When auditors discovered the fraud in 2002, WorldCom filed for the largest bankruptcy in US history at the time. The CEO and CFO were later convicted of fraud and accounting violations.
The document summarizes the rise and fall of telecommunications company WorldCom. It traces WorldCom's history from its founding in 1983 as a small long distance provider to becoming the second largest telecom company by 1998 after acquiring over 30 other companies. However, to meet Wall Street expectations and cover losses, WorldCom fraudulently reported billions in line costs as capital expenditures between 2000-2002. When the SEC investigated suspicious financial reports, WorldCom admitted to the $3.8 billion accounting fraud, causing its stock price to plummet and filing for Chapter 11 bankruptcy.
WorldCom started as a small long distance provider in 1983 and grew rapidly through acquisitions to become the second largest telecom company by 1998. However, falling revenues due to the dot-com bust and merger failures led to huge pressure to meet Wall Street expectations. WorldCom's leaders, including CEO Ebbers, resorted to fraudulent accounting by misclassifying operating expenses as capital expenditures, hiding $3.8 billion in losses. An internal audit uncovered the fraud in 2002, leading to WorldCom filing for bankruptcy, destroying $180 billion in shareholder value and costing 57,000 employees their jobs. Ebbers and other executives faced legal consequences for their role in the massive accounting scandal.
Duke Energy reported lower earnings in Q1 2004 compared to Q1 2003. Earnings per share were $0.36 compared to $0.25 the prior year. Ongoing earnings per share excluding special items were $0.32 compared to $0.42. Several business units experienced lower earnings including Franchised Electric, Natural Gas Transmission and Duke Energy North America which was impacted by mark-to-market losses. However, Field Services more than doubled its earnings and the company exceeded its asset sales target for the year.
The document provides an overview of the collapse of Enron through a literature review and analysis of Enron's financial statements. It discusses how Enron rapidly grew through acquisitions but also took on large amounts of debt through special purpose entities. The financial analysis shows abnormalities like exponential revenue and asset growth but negative cash flows and dividends. The theoretical analysis examines how Enron failed its stakeholders like employees, the community, and auditors. Enron had close ties with government officials but its board failed in oversight as the company collapsed.
WorldCom started as a small long distance provider in 1983 and grew through many acquisitions to become the second largest telecom company in the US by 1998. However, the dot-com bust led to revenue shortfalls and high debt. To hide losses and meet Wall Street expectations, WorldCom fraudulently classified $3.8 billion in operating expenses as capital expenditures. An internal audit uncovered the fraud in 2002, and WorldCom filed for bankruptcy, resulting in 57,000 job losses and $180 billion in lost shareholder value. CEO Bernie Ebbers and CFO Scott Sullivan were later convicted for their role in the massive accounting scandal.
Duke Energy reported higher earnings per share in the first quarter of 2005 compared to the previous year. Earnings per share were $0.91 versus $0.34 in 2004, driven by gains from the sale of assets in the Field Services business and improved performance across most business units. Interest expense was lower due to debt reduction efforts. Duke Energy will hold an earnings call to discuss the results and outlook further.
CSC reported revenue growth of 5.6% over the previous year's quarter to $3.52 billion. Net income was $157.5 million. The company was pleased with major new business announcements of $5.3 billion from continuing operations. Global commercial activities drove revenue growth, benefiting from favorable currency movements and recent IT services engagements. The U.S. federal government business declined due to the completion of some contracts.
TXU Corp reported a net loss of $4.2 billion for 2002 due to write-offs related to exiting its European business. Excluding unusual charges, net income was $622 million. For 2003, TXU expects earnings per share between $1.95-$2.05, driven by cost reductions and growth in its energy delivery businesses in North America and Australia. Cash from operations is projected to be $2.3 billion, allowing $1.5 billion to reduce debt after capital expenditures and dividends.
Duke Energy reported second quarter 2005 earnings per share of $0.33, down from $0.46 in the second quarter of 2004. Mild weather led to lower sales for the Franchised Electric and DENA segments. Field Services and International posted strong results. Despite weather impacts, Duke Energy expects to meet its 2005 EPS target of $1.60 per share due to anticipated stronger performance in the second half of the year.
This document discusses several corporate fraud cases, including Enron, Worldcom, and Parmalat. It provides details on the fraudulent accounting techniques used by Enron to inflate profits and conceal losses, such as manipulating earnings, hiding uncollectible receivables, and concealing failures in business segments. For Worldcom, it outlines how the company misstated cash flow by improperly recording expenses as capital expenditures, and overstated earnings by $7.2 billion total.
Goodrich Corporation announced strong financial results for the second quarter of 2005 and increased its full year 2005 outlook. Net income for Q2 2005 was $76 million, up 91% from the previous year. Sales increased 20% to $1.353 billion. The company increased its full year 2005 outlook for sales to $5.2-5.3 billion and net income per share to $2.00-$2.10. The improved results were driven by growth in commercial aerospace, defense, and all other market channels. Management attributed the performance to the commercial aerospace upturn and strong demand for defense products.
Goodrich Corporation announced strong financial results for the second quarter of 2005 and increased its full year 2005 outlook. Net income for Q2 2005 was $76 million, up 91% from the previous year. Sales increased 20% to $1.353 billion. The company increased its full year 2005 outlook for sales to $5.2-5.3 billion and net income per share to $2.00-$2.10. The improved results were driven by growth in commercial aerospace, defense, and all other market channels. Management attributed the performance to the commercial aerospace upturn and strong demand for defense products.
Dupont reported third quarter 2005 earnings per share of -$0.09, which included significant one-time charges. Excluding these charges, earnings were $0.33 per share, up 32% from the prior year. Segment sales grew 5% to $6.2 billion due to price increases across all operating segments. However, business was impacted by hurricanes Katrina and Rita, which reduced sales by $100 million and operating income by $50 million. For the fourth quarter, Dupont expects challenges from plant shutdowns due to the hurricanes but remains focused on offsetting rising costs through pricing.
Worldcom and Enron both engaged in accounting fraud in the late 1990s and early 2000s. Worldcom fraudulently reported $3.8 billion in line costs as capital expenditures instead of operating expenses. An internal audit uncovered the fraud, and Worldcom later filed for the largest bankruptcy in US history at that time. Enron used accounting loopholes and off-balance sheet entities to hide billions in debt and losses. When its stock price declined, Enron's true financial situation was revealed and it filed for bankruptcy in 2001. In response, Congress passed the Sarbanes-Oxley Act to increase accounting oversight and impose harsher penalties for corporate and accounting fraud.
This document summarizes Duke Energy's and Cinergy's first quarter 2006 earnings conference call. David Hauser, Duke Energy's CFO, discussed the financial results of both companies. For Duke Energy, earnings per share were $0.48, up from the prior year. Segment EBIT increased across most business units due to factors like customer and volume growth. For Cinergy, ongoing earnings per share were $0.62, up slightly from the prior year, while reported earnings were $0.39 due to merger costs. Hauser provided an overview of key financial metrics and outlook for both companies.
CSC reported strong financial results for the second quarter of fiscal year 2005, with revenue increasing 9.6% year-over-year to $3.93 billion. Both the global commercial and U.S. federal government segments contributed to revenue growth. CSC won $3.9 billion in new contracts during the quarter. The company expects continued demand in the federal government for IT modernization and infrastructure projects.
Progress Energy reported earnings of $2.65 per share for 2001, meeting expectations. Earnings were positively impacted by its non-regulated businesses which offset the effects of mild weather and an industrial slowdown. It also received tax rulings for four synthetic fuel plants and reaffirmed its 2002 guidance of $3.90 to $4.10 per share.
Duke Energy 04-29-04_PMA_DLH_1Q04_Earnings_Reviewfinance21
The document provides an earnings review for Duke Energy Corporation for the first quarter of 2004. It summarizes key financial highlights including reported EPS of $0.36 and EPS excluding special items of $0.32. It reviews performance across Duke Energy's business segments, noting solid earnings from regulated businesses and improved results from field services. It also discusses special items including a $325 million pre-tax loss from the anticipated sale of Southeast generation assets. The document indicates progress on financial plans including $200 million in debt reductions and $1.5 billion in asset sale proceeds to date.
Motorola announced record second quarter sales and earnings, with sales up 17% to $8.83 billion and earnings per share up 52% to $0.38. Mobile device shipments reached a record 33.9 million units, representing 18.1% of the global market. All four of Motorola's business segments grew profitability. For the third quarter, Motorola expects sales between $8.9-9.1 billion and earnings per share of $0.27-0.29.
Concepts coveredFINAL EXAM - Part IOutline of Topics coveredTopicW.docxmaxinesmith73660
Concepts coveredFINAL EXAM - Part IOutline of Topics coveredTopicWeek CoveredPerm Ms1, 2Temp Ms1, 2AMT3Tax Credits3Valuation Allowance3 (lesson 2)State Blended Rate4Interim Financial reporting5FIN 486, 7True-up9FS Disclosures8, 9Foreign - APB 2311, 12Stock Options13, 14
INDEXDELTA Corporation & SubsidiaryFINAL EXAM Part 1INDEX to workpaperstab #Tab DescriptionQQuestions to be answeredYellow tab - Facts providedFDELTA Corporation FactsFADelta Fixed Asset RollforwardFCFoxtrot Corporation FactsI2009 Interim ScheduleCDelta Current ProvisionPDelta 2011 Provision-to-Return scheduleDDelta Deferred Rollforward scheduleTATax Account Rollforward scheduleRRate ReconciliationFS2012 Consolidated Income Tax Footnote disclosure
&A
&Z&F
Printed on: &D &T
Q - Questions to be answeredDELTA Corporation & SubsidiaryFINAL EXAM Part 1TasksConsidering the facts outlined on tab "F" determine the following -1For 2009 only - determine the interim tax expense by completing the schedule on tab IConsider only pre-tax income, perms and credits from facts tab. Assume no VA recorded for this portion of the exercise.2Prepare a current provision and deferred rollforward schedule for each of the years 2009 through 2012.see example for 2009 at tabs C and D3Compute the 2011 provision-to-return JE and post as part of the 2012 provision - use the template on tab P as a guide4Complete the Tax Account Analysis schedule tab TA for each year 2009 to 2012.Note - actual taxes paid are reflected on this tab5Complete a Rate Reconciliation schedule tab R for each year 2009 to 2012.see example for 20096Prepare a current and deferred tax provision for Foxtrot Corporation for the year 2012 (in FC and RC). - see facts at tab FC and complete the yellow highlighted cells in the trial balance.7For 2012 only - create the Consolidated Income Tax footnotes (with 2011 comparison) (i.e., Delta + Foxtrot). - use the templates on tab FS as a guidePlease show all your work (to provide for maximum credit).Feel free to add columns, rows, & worksheets as necessary to complete the above tasksPlease reference your workpapers to make the review easier.Note - there are hidden columns on tabs C, D, and P that you may want to use
&A
&Z&F
Printed on: &D &T
F - Delta FactsDELTA CorporationFACTSlinkDELTA is a "C" corporation (SEC registrant) operating entirely within the U.S. on the basis of a calendar year end. Delta was formed 1/1/2009.Year 2009Year 2010Year 2011Year 2012per returnper returnper provisionper return (only if different)per provisionFederal Tax Rate35%35%35%35%States - 100% NV - 0% rate100% NV - 0% rate100% OR @ 7.6% flat tax rate80% OR @ 7.6% rate20% IL @ 7.00% flat tax rateAssume no fed/state differences other than state tax deduction which is not deductible for state tax purposes.Assume states do not have an AMT tax concept.Assume headquarters moved from Reno Nevada to Portland Oregon on 1/1/2011. Assume began operations in Illinois on 1/1/2012. [Hint - Prior YE deferred tax balance sho.
Black & Decker reported first quarter earnings of $1.45 per share from continuing operations, an 11% increase over the prior year. Sales increased 1% to $1.5 billion due to growth in power tools, hardware, and fastening systems segments, partially offset by currency impacts. The company expects mid-single digit sales growth and modest operating margin improvements for the full year.
Black & Decker reported first quarter 2006 net earnings from continuing operations of $113.1 million, or $1.45 per diluted share, an 11% increase over the prior year. Sales increased 1% to $1.5 billion due to growth in international markets and an acquisition, partly offset by a divestiture. The company declared a quarterly dividend of $0.38 per share and expects full year 2006 diluted EPS from continuing operations of $7.30 to $7.45, representing 8-11% growth over the prior year.
Northrop Grumman reported first quarter 2006 results, with earnings per share of $1.02 and income from continuing operations of $357 million. Contract acquisitions reached a record $12.3 billion. Sales decreased to $7.2 billion compared to $7.5 billion in the first quarter of 2005. The company reaffirmed full-year 2006 guidance for earnings per share and cash from operations. Segment results were mixed, with higher margins in Information & Services and Aerospace but lower margins in Ships.
Christian Schussele Men of ProgressOil on canvas, 1862Coope.docxtroutmanboris
Christian Schussele Men of Progress
Oil on canvas, 1862
Cooper Union, New York, New York
Transfer from the National Gallery of Art; gift of Andrew W. Mellon, 1942
NPG.65.60
Edward Sorel, “People of Progress” 1999, Cooper Union, New York, New York
Syllabus
The clerks of the Department of State of the United States may be called upon to give evidence of transactions in the Department which are not of a confidential character.
The Secretary of State cannot be called upon as a witness to state transactions of a confidential nature which may have occurred in his Department. But he may be called upon to give testimony of circumstances which were not of that character.
Clerks in the Department of State were directed to be sworn, subject to objections to questions upon confidential matters.
Some point of time must be taken when the power of the Executive over an officer, not removable at his will, must cease. That point of time must be when the constitutional power of appointment has been exercised. And the power has been exercised when the last act required from the person possessing the power has been performed. This last act is the signature of the commission.
If the act of livery be necessary to give validity to the commission of an officer, it has been delivered when executed, and given to the Secretary of State for the purpose of being sealed, recorded, and transmitted to the party.
In cases of commissions to public officers, the law orders the Secretary of State to record them. When, therefore, they are signed and sealed, the order for their being recorded is given, and, whether inserted inserted into the book or not, they are recorded.
When the heads of the departments of the Government are the political or confidential officers of the Executive, merely to execute the will of the President, or rather to act in cases in which the Executive possesses a constitutional or legal discretion, nothing can be more perfectly clear than that their acts are only politically examinable. But where a specific duty is assigned by law, and individual rights depend upon the performance of that duty, it seems equally clear that the individual who considers himself injured has a right to resort to the laws of his country for a remedy.
The President of the United States, by signing the commission, appointed Mr. Marbury a justice of the peace for the County of Washington, in the District of Columbia, and the seal of the United States, affixed thereto by the Secretary of State, is conclusive testimony of the verity of the signature, and of the completion of the appointment; and the appointment conferred on him a legal right to the office for the space of five years. Having this legal right to the office, he has a consequent right to the commission, a refusal to deliver which is a plain violation of that right for which the laws of the country afford him a remedy.
To render a mandamus a proper remedy, the officer to whom it is directed must be one to who.
Christian EthicsChristian ethics deeply align with absolutism. E.docxtroutmanboris
Christian Ethics
Christian ethics deeply align with absolutism. Ethical absolutism claims that moral principles do exist. According to Christians, God created moral absolutes. These absolutes can be seen in God’s revelation. God’s special and general revelation reveal his moral truths. This does not mean that only Christians can understand moral truths. Because humans are made in God’s image, they can recognize moral truths even if they do not believe in God
[1]
. These absolutes were instated by God. Therefore, they apply to all of humanity. This worldview is in direct opposition to the idea of relativism. Christian ethics cannot be viewed through a relativistic point of view. According to relativism, there is no moral truths. There is no absolute distinction between right and wrong within this way of thinking. Right and wrong can be decided by individuals or groups of people. Cultures decide what is right for themselves and their way of life. Even individuals have the ability to decide their own personal moral code. This can seem somewhat reasonable at times. Some things that were considered moral or immoral in the past are viewed differently today. Even with this understanding, Christians deny the idea of relativism. Christians hold to the belief that moral truths come from God. Therefore, these truths do not change. God himself never changes; therefore, his moral truths remain the same. According to Christian ethics, mankind is expected to hold to the moral absolutes mandated by God himself. This understanding is not compatible with relativism. Relativism makes no place of a God. From a relativistic point of view, mankind decides their own morality. Right and wrong are not fixed. In Christian ethics, right and wrong are permanently decided by the God of the universe.
The subjective aspects of Christian ethics can look similar to relativism. The areas that are somewhat subjective in Christian aspects are referred to as the liberties of a Christian. There are some matters that are not said to be morally wrong in the Bible. Some see these issues to be wrong; therefore, they are. Others do not find certain issues to be morally wrong. These individuals are claiming their Christian liberty. One of these issues is drinking alcohol. Some Christians believe that ingesting any amount of alcohol is morally wrong. According to the idea of Christian liberty, it would be wrong for the individuals who hold to this belief to drink alcohol. Others do not have this conviction and are not doing wrong by consuming alcohol. On the surface, the idea of Christian liberty can seem to be related to relativism, but upon closer inspection these ideas are not closely related. Christian liberty is a Biblical concept that harmonize well with the overall message of the Bible. Relativism is nowhere found in the Bible. The Bible is clear that there are universal moral laws. These laws are placed upon humanity by God himself. There are some areas where the Bible remain.
More Related Content
Similar to Page 1 of 10 NORTEL NETWORKS CORPORATION ETHIC
WorldCom started as a small long distance provider in 1983 and grew through many acquisitions to become the second largest telecom company in the US by 1998. However, the dot-com bust led to revenue shortfalls and high debt. To hide losses and meet Wall Street expectations, WorldCom fraudulently classified $3.8 billion in operating expenses as capital expenditures. An internal audit uncovered the fraud in 2002, and WorldCom filed for bankruptcy, resulting in 57,000 job losses and $180 billion in lost shareholder value. CEO Bernie Ebbers and CFO Scott Sullivan were later convicted for their role in the massive accounting scandal.
Duke Energy reported higher earnings per share in the first quarter of 2005 compared to the previous year. Earnings per share were $0.91 versus $0.34 in 2004, driven by gains from the sale of assets in the Field Services business and improved performance across most business units. Interest expense was lower due to debt reduction efforts. Duke Energy will hold an earnings call to discuss the results and outlook further.
CSC reported revenue growth of 5.6% over the previous year's quarter to $3.52 billion. Net income was $157.5 million. The company was pleased with major new business announcements of $5.3 billion from continuing operations. Global commercial activities drove revenue growth, benefiting from favorable currency movements and recent IT services engagements. The U.S. federal government business declined due to the completion of some contracts.
TXU Corp reported a net loss of $4.2 billion for 2002 due to write-offs related to exiting its European business. Excluding unusual charges, net income was $622 million. For 2003, TXU expects earnings per share between $1.95-$2.05, driven by cost reductions and growth in its energy delivery businesses in North America and Australia. Cash from operations is projected to be $2.3 billion, allowing $1.5 billion to reduce debt after capital expenditures and dividends.
Duke Energy reported second quarter 2005 earnings per share of $0.33, down from $0.46 in the second quarter of 2004. Mild weather led to lower sales for the Franchised Electric and DENA segments. Field Services and International posted strong results. Despite weather impacts, Duke Energy expects to meet its 2005 EPS target of $1.60 per share due to anticipated stronger performance in the second half of the year.
This document discusses several corporate fraud cases, including Enron, Worldcom, and Parmalat. It provides details on the fraudulent accounting techniques used by Enron to inflate profits and conceal losses, such as manipulating earnings, hiding uncollectible receivables, and concealing failures in business segments. For Worldcom, it outlines how the company misstated cash flow by improperly recording expenses as capital expenditures, and overstated earnings by $7.2 billion total.
Goodrich Corporation announced strong financial results for the second quarter of 2005 and increased its full year 2005 outlook. Net income for Q2 2005 was $76 million, up 91% from the previous year. Sales increased 20% to $1.353 billion. The company increased its full year 2005 outlook for sales to $5.2-5.3 billion and net income per share to $2.00-$2.10. The improved results were driven by growth in commercial aerospace, defense, and all other market channels. Management attributed the performance to the commercial aerospace upturn and strong demand for defense products.
Goodrich Corporation announced strong financial results for the second quarter of 2005 and increased its full year 2005 outlook. Net income for Q2 2005 was $76 million, up 91% from the previous year. Sales increased 20% to $1.353 billion. The company increased its full year 2005 outlook for sales to $5.2-5.3 billion and net income per share to $2.00-$2.10. The improved results were driven by growth in commercial aerospace, defense, and all other market channels. Management attributed the performance to the commercial aerospace upturn and strong demand for defense products.
Dupont reported third quarter 2005 earnings per share of -$0.09, which included significant one-time charges. Excluding these charges, earnings were $0.33 per share, up 32% from the prior year. Segment sales grew 5% to $6.2 billion due to price increases across all operating segments. However, business was impacted by hurricanes Katrina and Rita, which reduced sales by $100 million and operating income by $50 million. For the fourth quarter, Dupont expects challenges from plant shutdowns due to the hurricanes but remains focused on offsetting rising costs through pricing.
Worldcom and Enron both engaged in accounting fraud in the late 1990s and early 2000s. Worldcom fraudulently reported $3.8 billion in line costs as capital expenditures instead of operating expenses. An internal audit uncovered the fraud, and Worldcom later filed for the largest bankruptcy in US history at that time. Enron used accounting loopholes and off-balance sheet entities to hide billions in debt and losses. When its stock price declined, Enron's true financial situation was revealed and it filed for bankruptcy in 2001. In response, Congress passed the Sarbanes-Oxley Act to increase accounting oversight and impose harsher penalties for corporate and accounting fraud.
This document summarizes Duke Energy's and Cinergy's first quarter 2006 earnings conference call. David Hauser, Duke Energy's CFO, discussed the financial results of both companies. For Duke Energy, earnings per share were $0.48, up from the prior year. Segment EBIT increased across most business units due to factors like customer and volume growth. For Cinergy, ongoing earnings per share were $0.62, up slightly from the prior year, while reported earnings were $0.39 due to merger costs. Hauser provided an overview of key financial metrics and outlook for both companies.
CSC reported strong financial results for the second quarter of fiscal year 2005, with revenue increasing 9.6% year-over-year to $3.93 billion. Both the global commercial and U.S. federal government segments contributed to revenue growth. CSC won $3.9 billion in new contracts during the quarter. The company expects continued demand in the federal government for IT modernization and infrastructure projects.
Progress Energy reported earnings of $2.65 per share for 2001, meeting expectations. Earnings were positively impacted by its non-regulated businesses which offset the effects of mild weather and an industrial slowdown. It also received tax rulings for four synthetic fuel plants and reaffirmed its 2002 guidance of $3.90 to $4.10 per share.
Duke Energy 04-29-04_PMA_DLH_1Q04_Earnings_Reviewfinance21
The document provides an earnings review for Duke Energy Corporation for the first quarter of 2004. It summarizes key financial highlights including reported EPS of $0.36 and EPS excluding special items of $0.32. It reviews performance across Duke Energy's business segments, noting solid earnings from regulated businesses and improved results from field services. It also discusses special items including a $325 million pre-tax loss from the anticipated sale of Southeast generation assets. The document indicates progress on financial plans including $200 million in debt reductions and $1.5 billion in asset sale proceeds to date.
Motorola announced record second quarter sales and earnings, with sales up 17% to $8.83 billion and earnings per share up 52% to $0.38. Mobile device shipments reached a record 33.9 million units, representing 18.1% of the global market. All four of Motorola's business segments grew profitability. For the third quarter, Motorola expects sales between $8.9-9.1 billion and earnings per share of $0.27-0.29.
Concepts coveredFINAL EXAM - Part IOutline of Topics coveredTopicW.docxmaxinesmith73660
Concepts coveredFINAL EXAM - Part IOutline of Topics coveredTopicWeek CoveredPerm Ms1, 2Temp Ms1, 2AMT3Tax Credits3Valuation Allowance3 (lesson 2)State Blended Rate4Interim Financial reporting5FIN 486, 7True-up9FS Disclosures8, 9Foreign - APB 2311, 12Stock Options13, 14
INDEXDELTA Corporation & SubsidiaryFINAL EXAM Part 1INDEX to workpaperstab #Tab DescriptionQQuestions to be answeredYellow tab - Facts providedFDELTA Corporation FactsFADelta Fixed Asset RollforwardFCFoxtrot Corporation FactsI2009 Interim ScheduleCDelta Current ProvisionPDelta 2011 Provision-to-Return scheduleDDelta Deferred Rollforward scheduleTATax Account Rollforward scheduleRRate ReconciliationFS2012 Consolidated Income Tax Footnote disclosure
&A
&Z&F
Printed on: &D &T
Q - Questions to be answeredDELTA Corporation & SubsidiaryFINAL EXAM Part 1TasksConsidering the facts outlined on tab "F" determine the following -1For 2009 only - determine the interim tax expense by completing the schedule on tab IConsider only pre-tax income, perms and credits from facts tab. Assume no VA recorded for this portion of the exercise.2Prepare a current provision and deferred rollforward schedule for each of the years 2009 through 2012.see example for 2009 at tabs C and D3Compute the 2011 provision-to-return JE and post as part of the 2012 provision - use the template on tab P as a guide4Complete the Tax Account Analysis schedule tab TA for each year 2009 to 2012.Note - actual taxes paid are reflected on this tab5Complete a Rate Reconciliation schedule tab R for each year 2009 to 2012.see example for 20096Prepare a current and deferred tax provision for Foxtrot Corporation for the year 2012 (in FC and RC). - see facts at tab FC and complete the yellow highlighted cells in the trial balance.7For 2012 only - create the Consolidated Income Tax footnotes (with 2011 comparison) (i.e., Delta + Foxtrot). - use the templates on tab FS as a guidePlease show all your work (to provide for maximum credit).Feel free to add columns, rows, & worksheets as necessary to complete the above tasksPlease reference your workpapers to make the review easier.Note - there are hidden columns on tabs C, D, and P that you may want to use
&A
&Z&F
Printed on: &D &T
F - Delta FactsDELTA CorporationFACTSlinkDELTA is a "C" corporation (SEC registrant) operating entirely within the U.S. on the basis of a calendar year end. Delta was formed 1/1/2009.Year 2009Year 2010Year 2011Year 2012per returnper returnper provisionper return (only if different)per provisionFederal Tax Rate35%35%35%35%States - 100% NV - 0% rate100% NV - 0% rate100% OR @ 7.6% flat tax rate80% OR @ 7.6% rate20% IL @ 7.00% flat tax rateAssume no fed/state differences other than state tax deduction which is not deductible for state tax purposes.Assume states do not have an AMT tax concept.Assume headquarters moved from Reno Nevada to Portland Oregon on 1/1/2011. Assume began operations in Illinois on 1/1/2012. [Hint - Prior YE deferred tax balance sho.
Black & Decker reported first quarter earnings of $1.45 per share from continuing operations, an 11% increase over the prior year. Sales increased 1% to $1.5 billion due to growth in power tools, hardware, and fastening systems segments, partially offset by currency impacts. The company expects mid-single digit sales growth and modest operating margin improvements for the full year.
Black & Decker reported first quarter 2006 net earnings from continuing operations of $113.1 million, or $1.45 per diluted share, an 11% increase over the prior year. Sales increased 1% to $1.5 billion due to growth in international markets and an acquisition, partly offset by a divestiture. The company declared a quarterly dividend of $0.38 per share and expects full year 2006 diluted EPS from continuing operations of $7.30 to $7.45, representing 8-11% growth over the prior year.
Northrop Grumman reported first quarter 2006 results, with earnings per share of $1.02 and income from continuing operations of $357 million. Contract acquisitions reached a record $12.3 billion. Sales decreased to $7.2 billion compared to $7.5 billion in the first quarter of 2005. The company reaffirmed full-year 2006 guidance for earnings per share and cash from operations. Segment results were mixed, with higher margins in Information & Services and Aerospace but lower margins in Ships.
Similar to Page 1 of 10 NORTEL NETWORKS CORPORATION ETHIC (20)
Christian Schussele Men of ProgressOil on canvas, 1862Coope.docxtroutmanboris
Christian Schussele Men of Progress
Oil on canvas, 1862
Cooper Union, New York, New York
Transfer from the National Gallery of Art; gift of Andrew W. Mellon, 1942
NPG.65.60
Edward Sorel, “People of Progress” 1999, Cooper Union, New York, New York
Syllabus
The clerks of the Department of State of the United States may be called upon to give evidence of transactions in the Department which are not of a confidential character.
The Secretary of State cannot be called upon as a witness to state transactions of a confidential nature which may have occurred in his Department. But he may be called upon to give testimony of circumstances which were not of that character.
Clerks in the Department of State were directed to be sworn, subject to objections to questions upon confidential matters.
Some point of time must be taken when the power of the Executive over an officer, not removable at his will, must cease. That point of time must be when the constitutional power of appointment has been exercised. And the power has been exercised when the last act required from the person possessing the power has been performed. This last act is the signature of the commission.
If the act of livery be necessary to give validity to the commission of an officer, it has been delivered when executed, and given to the Secretary of State for the purpose of being sealed, recorded, and transmitted to the party.
In cases of commissions to public officers, the law orders the Secretary of State to record them. When, therefore, they are signed and sealed, the order for their being recorded is given, and, whether inserted inserted into the book or not, they are recorded.
When the heads of the departments of the Government are the political or confidential officers of the Executive, merely to execute the will of the President, or rather to act in cases in which the Executive possesses a constitutional or legal discretion, nothing can be more perfectly clear than that their acts are only politically examinable. But where a specific duty is assigned by law, and individual rights depend upon the performance of that duty, it seems equally clear that the individual who considers himself injured has a right to resort to the laws of his country for a remedy.
The President of the United States, by signing the commission, appointed Mr. Marbury a justice of the peace for the County of Washington, in the District of Columbia, and the seal of the United States, affixed thereto by the Secretary of State, is conclusive testimony of the verity of the signature, and of the completion of the appointment; and the appointment conferred on him a legal right to the office for the space of five years. Having this legal right to the office, he has a consequent right to the commission, a refusal to deliver which is a plain violation of that right for which the laws of the country afford him a remedy.
To render a mandamus a proper remedy, the officer to whom it is directed must be one to who.
Christian EthicsChristian ethics deeply align with absolutism. E.docxtroutmanboris
Christian Ethics
Christian ethics deeply align with absolutism. Ethical absolutism claims that moral principles do exist. According to Christians, God created moral absolutes. These absolutes can be seen in God’s revelation. God’s special and general revelation reveal his moral truths. This does not mean that only Christians can understand moral truths. Because humans are made in God’s image, they can recognize moral truths even if they do not believe in God
[1]
. These absolutes were instated by God. Therefore, they apply to all of humanity. This worldview is in direct opposition to the idea of relativism. Christian ethics cannot be viewed through a relativistic point of view. According to relativism, there is no moral truths. There is no absolute distinction between right and wrong within this way of thinking. Right and wrong can be decided by individuals or groups of people. Cultures decide what is right for themselves and their way of life. Even individuals have the ability to decide their own personal moral code. This can seem somewhat reasonable at times. Some things that were considered moral or immoral in the past are viewed differently today. Even with this understanding, Christians deny the idea of relativism. Christians hold to the belief that moral truths come from God. Therefore, these truths do not change. God himself never changes; therefore, his moral truths remain the same. According to Christian ethics, mankind is expected to hold to the moral absolutes mandated by God himself. This understanding is not compatible with relativism. Relativism makes no place of a God. From a relativistic point of view, mankind decides their own morality. Right and wrong are not fixed. In Christian ethics, right and wrong are permanently decided by the God of the universe.
The subjective aspects of Christian ethics can look similar to relativism. The areas that are somewhat subjective in Christian aspects are referred to as the liberties of a Christian. There are some matters that are not said to be morally wrong in the Bible. Some see these issues to be wrong; therefore, they are. Others do not find certain issues to be morally wrong. These individuals are claiming their Christian liberty. One of these issues is drinking alcohol. Some Christians believe that ingesting any amount of alcohol is morally wrong. According to the idea of Christian liberty, it would be wrong for the individuals who hold to this belief to drink alcohol. Others do not have this conviction and are not doing wrong by consuming alcohol. On the surface, the idea of Christian liberty can seem to be related to relativism, but upon closer inspection these ideas are not closely related. Christian liberty is a Biblical concept that harmonize well with the overall message of the Bible. Relativism is nowhere found in the Bible. The Bible is clear that there are universal moral laws. These laws are placed upon humanity by God himself. There are some areas where the Bible remain.
Christian Ethics BA 616 Business Ethics Definiti.docxtroutmanboris
Christian Ethics
BA 616 Business Ethics
Definition of Christian Ethics
A system of values based upon the Judeo/Christian Scriptures
Principles of behavior in concordance with the behaviors of Christian teachings
Standards of thought and behavior as taught by Jesus.
Discussion
What are some of the “ethical” attributes presented in the teachings of Jesus?
What are some ethical attributes presented in the teachings of other religious persons?
Quotes about Christian Ethics
Quotes on Christian Ethics
Recognize the value of work
“And when you reap the harvest of your land, you shall not reap your field right up to its edge, nor shall you gather the gleanings after your harvest. You shall leave them for the poor and for the sojourner: I am the Lord your God.” (Leviticus 23:22).
Do not give the poor the food, rather allow the poor to work for themselves
Discussion
What are examples of the value of work?
Today, some U.S. state governors are trying to get those “able bodied” individuals to work for welfare. They are meeting great resistance politically, why do you think this is?
The value of work
Confirmed by Elton Mayo
Fulfills social, psychological and economic needs of the individual
“If a man will not work, he shall not eat” (2 Thessalonians 3:10)
Christian Ethics
The fruit of a people that have inwardly committed their lives to Christ and are outwardly aligning their actions with His teachings.
“May the favor of the Lord our God rest on us; establish the work of our hands for us— yes, establish the work of our hands” (Psalms. 90:17).
Employees with a Christian Code of Ethics
Welcome accountability
Happy to show their efforts
A system of checks and balances
Sees possible training moment
Fosters collaboration with management
“Those who work their land will have abundant food, but those who chase fantasies have no sense” (Proverbs 12:11)
Employees with a Christian Code of Ethics
Not motivated by greed
Work is its own reward
Measure success in a non-monetary way
Seek payment for the work they do
Money is second to obedience
“Whatever you do, work at it with all your heart, as working for the Lord, not for human masters” (Colossians 3:23).
Employees with a Christian Code of Ethics
Are highly productive
Are work focused
Work hard throughout the day
Find value in completing assigned tasks
Understand that they are there to work
“Diligent hands will rule, but laziness ends in forced labor” (Proverbs 12:24).
Employees with a Christian Code of Ethics
Have a strong work ethic
Believe in a Biblical perspective of work
Reliable
Recognize the value of work
Relate their job to their faith
“All hard work brings a profit, but mere talk leads only to poverty” (Proverbs 14:23)
Employees with a Christian Code of Ethics
Bring a cooperative spirit to the workplace
Supportive of management
Strong contribu.
CHPSI think you made a really good point that Howard lacks poli.docxtroutmanboris
CH/PS
I think you made a really good point that Howard lacks political aspects-especially for presidency. I have no heard his speeches quite yet (since I tend to stray away from politics altogether because people are so aggressive), do you think he is a great leader-type and is he charismatic at all? Great leaders, especially for presidency, should be honest, charismatic, and not only cater to the audience's needs but to the entire country's needs without sugar coating things.
Also, I am not sure what you mean by "In order to improve his leadership style, Jeff should change his model of carrying out business activities. This is because it can be copied and imitated by other companies (Mauri, 2016)".- how can it be imitted by other companies? In what way?
Do you think Jeff Bezos is a bad leader? and why?
CH/AR
I found your comparison of Howard Schultz and Jeff Bezos interesting and compelling. When I was looking at the list of leaders to select from, it was staggering to me how many of the corporate leaders have run or are planning to run for political office. I'm not sure, given our current political environment, that running a large corporation is the right background and experience for the leader of the United States. We'll see what happens in the next year and a half!
Amazon is an amazing, transformative company to watch. I work in the financial services industry and one of our leaders recently described our competition not as other financial services firms but as Amazon. Financial services firms pretty much all offer the same products and services and at a very reasonable price point. Amazon, however, has excelled in service delivery. I would imagine that at sometime in the future, Amazon will partner with a financial service firm to deliver products and services. I'll admit that I was and still am skeptical about Amazon's purchase of Whole Foods, but Bezos seems to be up for trying just about anything.
In your analysis of the two leaders, you didn't mention directly the challenges faced by either the leaders or the organization. Last year, Starbucks was all over the news regarding the incident involving two African American gentlemen and how they were treated by a manger at Starbucks. I'm curious how you or others in the class through about how Schultz led the organization through that crisis. Bezos, as well, has not been immune to controversy with his recent affair and divorce becoming public. How do the personal lives and behaviors of leader impact the organizations they lead? Should it matter?
SO
The first leader I chose to research is Sundar Pichai, the CEO of Google. Sundar began to show in interest in technology at an early age, and eventually earned a degree in Metallurgy, and an M.B.A from the Wharton School of the University of Pennsylvania. He then began working at Google in 2004 as the head of product management and development (Shepherd). From there, he assisted in the development of many different departme.
Chosen brand CHANELStudents are required to research a fash.docxtroutmanboris
Chosen brand:
CHANEL
Students are required to research a fashion brand of their choice and analyze its positioning strategy in the market.
● The report will assess students’ ability to collect data, in an efficient manner and use this data to scrutinise the marketing aspects of a fashion brand.
● The report will be covering the following subjects:
1. Analysis Of The Macro And Micro-environment of the brand.
2. Positioning Strategy Of The Brand: Target Customer(Pen Portrait)
3. Competitor Analysis.
4. Critical evaluation of the marketing communications strategy of the brand
supporting the development of the individual report, using relevant PRIMARY and SECONDARY RESEARCH.
NB: Please kindly devise a survey (Google forms) and make up some responses to it so as to then incorporate PRIMARY results into the report. Thanks
see attached file
word count: 2000 words
.
Chose one person to reply to ALBORES 1. Were Manning’s acti.docxtroutmanboris
Chose one person to reply to:
ALBORES
1. Were Manning’s actions legal under the Foreign Corrupt Practices Act, and what are the possible penalties for violating the act?
The Foreign Corrupt Practices Act states (1977) “It shall be unlawful for any issuer...to offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give... “. Manning assumed the duty of an issuer because he attended dinner with the prime minister to discuss the contract. Then, Manning offered to fly the prime minister to New York, which he then promised to pay for all of the prime minister's expenses. However, according to the Foreign Corrupt Practices Act (1977) a promise or offer is acceptable if the expense was ”reasonable and bona fide expenditure, such as travel and lodging expenses, incurred by or on behalf of a foreign official… was directly related to the promotion, demonstration, or explanation of products or services”. Manning promised to fly out the prime minister because he wanted to “discuss business further” (UMUC, 2019). Further, Manning used company funds to take the prime minister to luxurious activities and restaurants because he wanted to retain the contract from the prime minister.
Even though Manning did not directly give money to the prime minister, he authorized payment for the prime minster’s two-week stay, which did not involve discussing the contract. Out of the two weeks, business was only conducted for a day. In addition, Manning can be held responsible for bribing the customs officials at Neristan. According to the Foreign Corrupt Practices Act (1977), it is unlawful to influence “any act or decision of such foreign official in his official capacity... omit to do any act in violation of the lawful duty of such official”. Manning influenced the customs officials because Manning gave each custom official $100 to clear the shipment. Custom officials act on behalf of the Neristan government and sometimes require large shipments to be inspected. Manny will likely be held responsible for offering payment to the customs officials in exchange for expediting the company’s shipment.
If Manning violated the Foreign Corrupt Practices Act, he could face imprisonment. Also, the company may have to pay the penalty. The penalty for violating the act is “a fine of up to $2 million per violation. Likewise, an individual may face up to five years in prison and/or a fine of $250,000 per violation of the anti-bribery provision” (Woody, 2018, p. 275).
2. Were Manning’s actions legal under the UK Bribery Act and what are the possible penalties for violating the act?
Based on the UK Bribery Act (2010), an individual is guilty of bribing an official if “intention is to influence F (government official) in F's capacity as a foreign public official...intend to obtain or retain business, or an advantage in the conduct of business.”. Manning bribed the prime minister because he stated: “If, after we are done conducting busi.
Choosing your literary essay topic on Disgrace by J. M. Coetzee .docxtroutmanboris
Choosing your literary essay topic on
Disgrace
by J. M. Coetzee is the first step to writing your literary analysis paper.
After reading the novel, you should be able to decide in which direction you'd like to take your paper.
Topics/ approaches
(Focus on only one of the following, though some may overlap):
Analyze one of the minor characters, such as Petrus.
Example
: Analyze not only the chosen characters' personality but also what role they played in advancing the overall theme of the novel.
The protagonist's conflict, the hurdles to be overcome, and how he resolves it.
Examples:
It could be hope for change, both in South Africa and in David Lurie. OR: the disgrace David Lurie has suffered over the affair with a student and how that matches the disgrace South Africa has suffered through apartheid.
The function of setting to reinforce theme and characterization.
Example
: post-apartheid South Africa is a setting arguably more important than anything else in the novel. Your outside sources would be a bit of history concerning apartheid.The use of literary devices to communicate theme: imagery, metaphor, symbolism, foreshadowing, irony
Symbolism in the novel--
Examples:
Determine if David Lurie represents the old, white authorities of South Africa, while Lucy represents the new white people of South Africa. OR: Analyze what dogs symbolize in this story. Another example: What is symbolized by the opera David Lurie is writing on Byron?
Careful examination of one or more central scenes and its/their crucial role in plot development, resolution of conflict, and exposition of the theme.
Example:
Analyze one or more scenes in which hope that change for the better is possible through a character's remorse and subsequent action, for example, the scene in which David Lurie apologizes to the parents OR the scene in which Lucy gets raped.
The possible issue to be addressed in introduction or conclusion:
Characteristics that make the work typical (or atypical) of the period, the setting, or the author that produced it. For this information, you must go to a library database (you must read "How to Access Miami Dade Databases" if you don't know how) or a valid search site, such as Google Scholar (there is often a fee for this one).
Do
not
open or close with biographical material on the author. Biographical material is important as it influences the author’s writing only and should not be a focus of your paper.
Guidelines for Literary Essay
Be aware that you will be writing about a novel, which in its broadest sense is any extended fictional narrative almost always in prose, in which the representation of character is often the focus. Good authors use the elements of fiction, such as plot, theme, setting etc. purposefully, with a very clear goal in mind. One of the paths to literary analysis is to discover what the author's purpose is with each of his choices. Avoid the problem th.
Choosing your Philosophical Question The Final Project is an opp.docxtroutmanboris
Choosing your Philosophical Question
The Final Project is an opportunity for you to investigate one of the discussion questions to a much greater degree than in the forums. For your Final Project you will choose a philosophical question (stage 1), conduct an analysis of the claims and arguments relevant to the question by reading the primary texts of the philosopher (stage 2), and then take a position on the chosen question and offer an argument in support of your position (stage 3).
For this first stage of your Final Project assignment, (a) choose a question that appears as a discussion question (listed below, with some exceptions). You may choose one that you have previously begun to answer in the discussion forums, or one that you have yet to consider, then (b) explain briefly why you are interested in exploring this philosopher, the primary text and the question further. Submit this assignment on a Word .docx.
Week Four: Philosopher: Thomas Aquinas, Primary Text: Summa Theologica, Part 1, Question 2, Article 1-3
Q1. Does God really exist?
Question to write on, and answer the question fully in all its parts. Be mindful of the question. You are making a claim about something and offering support for it. Try to use examples from the Primary Texts you have read and/or your own experiences in that support.
DISCUSSION QUESTION CHOICE #1: Philosophy of Religion. Study Aquinas' five "ways" of demonstrating God's existence in the learning resources then engage in the study of ontology by examining your belief in God:
Answer the question: Does God really exist?
Use Aquinas and your own reasoning in your argument.
Kreeft, Peter. A Shorter Summa: The Essential Philosophical Passages of St. Thomas Aquinas'
Summa Theologica, Ignatius Press (San Francisco, 1993), chapter II.
Summa Theologica, Part 1, Question 2, Articles 1-3
The Existence of God
Because the chief aim of sacred doctrine is to teach the knowledge of God, not only as He is in
Himself, but also as He is the beginning of things and their last end, and especially of rational
creatures, as is clear from what has been already said, therefore, in our endeavor to expound this
science, we shall treat: (1) Of God; (2) Of the rational creature’s advance towards God; (3) Of
Christ, Who as man, is our way to God.
In treating of God there will be a threefold division: For we shall consider (1) Whatever concerns
the Divine Essence; (2) Whatever concerns the distinctions of Persons; (3) Whatever concerns the
procession of creatures from Him
Concerning the Divine Essence, we must consider: (1) Whether God exists? (2) The manner of His
existence, or, rather, what is not the manner of His existence; (3) Whatever concerns His
operations — namely, His knowledge, will, power.
Concerning the first, there are three points of inquiry: (1) Whether the proposition “God exists” is
self-evident? (2) Whether it is demonstrable? (3) Whether God exists?-
FIRST ARTICLE
Whether the Existence .
Choosing Your Research Method in a NutshellBy James Rice and.docxtroutmanboris
Choosing Your Research Method in a Nutshell
By James Rice and Marilyn K. Simon
Research Method Brief Type
Action research Participatory ‐ problem identification, solution,
solution review
III
Appreciative inquiry Helps groups identify solutions III, IV
Case Study research Group observation to determine how and why a
situation exists
III
Causal‐comparative research Identify causal relationship among variable that
can't be controlled
IV
Content analysis Analyze text and make inferences IV
Correlational research Collect data and determine level of correlation
between variables
I
Critical Incident technique Identification of determining incident of a critical
event
III
Delphi research Analysis of expert knowledge to forecast future
events
I, IV
Descriptive research Study of "as is" phenomena I
Design based research/ decision analysis Identify meaningful change in practices II
Ethnographic Cultural observation of a group
Evaluation research Study the effectiveness of an intervention or
program
IV
Experimental research Study the effect of manipulating a variable or
variables
II
Factor analysis Statistically assess the relationship between large
numbers of variables
I
Grounded Theory Produce a theory that explains a process based on
observation
III, IV
Hermeneutic research Study the meaning of subjects/texts (exegetics is
text only) by concentrating on the historical
meaning of the experience and its developmental
and cumulative effects on the individual and society
III
Historical research historical data collection and analysis of person or
organization
IV
Meta‐analysis research Seek patterns in data collected by other studies and
formulate principals
Narrative research Study of a single person's experiences
Needs assessment Systematic process of determine the needs of a
defined demographic population
Phenomenography Answer questions about thinking and learning
Phenomenology Make sense of lived experiences of participants
regarding a specified phenomenon.
III, IV
Quasi‐experimental Manipulation of variables in populations without
benefit of random assignment or control group.
II
Q‐method A mixed‐method approach to study subjectivity ‐
patterns of thought
I
Regression‐discontinuity design (RD) Cut‐off score assignment of participants to group
(non‐random) used to study effectiveness of an
intervention
II
Repertory grid analysis Interview process to determine how a person
interprets the meaning of an experience
I
Retrospective record review Study of historic data collected about a prior
intervention (both effected and control group)
II
Semiology Studies the meaning of symbols II, III
Situational analysis Post‐modernist approach to grounded theory
(holistic view rather than isolated variables) by
studying lived experiences around a phenomenon
Trend Analysis research Formulate a f.
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Create
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Describes the disorders and explains their differences
Discusses how these disorders are influenced by the legal system
Discusses how the legal system is influenced by these disorders
Include
a minimum of two peer-reviewed sources.
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500 words
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Compare/contrast the role women played in Puritan Society in colonial Massachusetts with their role in the Great Awakening of the 18th century.
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one of the following topics:
Native Americans
Women
Environment
Latin Americans
Sexual liberation
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at least three different newspaper articles between 1968 and 1980 that cover important changes affecting your topic. In the University Library, use the ProQuest
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Washington Post
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one of the following films for review (with faculty’s approval). Put yourself in the movie by choosing one character to follow. What cultural issues would you face? What are cultural challenges? Write a short paper describing the film and your observations. Present your findings in class.
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Secret Lives of Bees
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Chocolate
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Under the Same Moon
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Walk in the Clouds
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Identify
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Create
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Describe how forecasting can be used to implement this policy and highlight any limitations of the usage of forecasting.
Compare and contrast the different forms of forecasting used to aid decision-makers when evaluating policy outcomes.
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THE SACRIFICE HOW PRO-PALESTINE PROTESTS STUDENTS ARE SACRIFICING TO CHANGE T...indexPub
The recent surge in pro-Palestine student activism has prompted significant responses from universities, ranging from negotiations and divestment commitments to increased transparency about investments in companies supporting the war on Gaza. This activism has led to the cessation of student encampments but also highlighted the substantial sacrifices made by students, including academic disruptions and personal risks. The primary drivers of these protests are poor university administration, lack of transparency, and inadequate communication between officials and students. This study examines the profound emotional, psychological, and professional impacts on students engaged in pro-Palestine protests, focusing on Generation Z's (Gen-Z) activism dynamics. This paper explores the significant sacrifices made by these students and even the professors supporting the pro-Palestine movement, with a focus on recent global movements. Through an in-depth analysis of printed and electronic media, the study examines the impacts of these sacrifices on the academic and personal lives of those involved. The paper highlights examples from various universities, demonstrating student activism's long-term and short-term effects, including disciplinary actions, social backlash, and career implications. The researchers also explore the broader implications of student sacrifices. The findings reveal that these sacrifices are driven by a profound commitment to justice and human rights, and are influenced by the increasing availability of information, peer interactions, and personal convictions. The study also discusses the broader implications of this activism, comparing it to historical precedents and assessing its potential to influence policy and public opinion. The emotional and psychological toll on student activists is significant, but their sense of purpose and community support mitigates some of these challenges. However, the researchers call for acknowledging the broader Impact of these sacrifices on the future global movement of FreePalestine.
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A business may deal with both sales and purchases occasionally. They buy things from vendors and then sell them to their customers. Such dealings can be confusing at times. Because multiple clients may inquire about the same product at the same time, after purchasing those products, customers must be assigned to them. Odoo has a tool called Reception Report that can be used to complete this assignment. By enabling this, a reception report comes automatically after confirming a receipt, from which we can assign products to orders.
1. Page 1 of 10
NORTEL NETWORKS CORPORATION*
ETHICAL MISSTEPS
Linda A. Robinson
Centre for Accounting Ethics
School of Accountancy
University of Waterloo
Waterloo ON N2L 3G1
June 2005
2. * This case has been developed from publicly available
information solely for discussion
purposes and does not purport to be a complete and accurate
recounting of all relevant
facts, events and conditions.
Page 2 of 10
Acknowledgment:
I would like to thank Efrim Boritz, Allan Foerster and Alister
Mason
for their helpful comments on this case
Page 3 of 10
NORTEL NETWORKS CORPORATION
Learning Objectives
This case is designed for use in an ethics, auditing or corporate
governance course.
Through the case, students are encouraged to consider how a
corporation once considered
a Canadian jewel could lose its way ethically.
Background
It has been a long road that brought Nortel Networks
3. Corporation (“Nortel”) to its present
state. Northern Telecom, known as Northern Electric until
1976, was at one time a
wholly owned subsidiary of Bell Canada. By the mid 1980’s
Northern Telecom was the
second largest supplier of telecommunications equipment,
largely electronic telephone
switches, in North America. Northern Telecom expanded
worldwide firstly into Asia
then Europe, followed by Latin America. In 1995 Northern
Telecom shortens its name to
Nortel. Bell Canada, later known as BCE, divested its interest
in Northern Telecom
throughout the 1970’s owning just over 50 percent by 1980.
Finally in 2000, BCE
distributed its remaining ownership interest in Nortel to the
shareholders of BCE.
Not only was Nortel a telecommunications company, it was a
major research
powerhouse, receiving substantial support from provincial and
national governments.
The bulk of Nortel’s R&D was done in Canada to take
advantage of generous R & D tax
incentives.
Nortel, despite its large size, international shareholders and
global reach, was still a
“Canadian” company, with the majority of its management and
board of directors’
Canadian citizens.
It was John Roth (“Roth”) CEO who took Nortel from
traditional telephone technology to
the Internet.1 Nortel equipment carried 75 percent of the North
American Internet traffic
4. in the late 1990’s. The company’s growth was due to both the
explosion in the Internet
market and through acquisitions. In 2000 alone, Nortel
acquired 11 companies at a cost
of US$19.7 billion. By 1998, Nortel was Canada’s largest
telecommunication company
with 73,000 employees and revenues of US$22 billion.2
The bubble burst when Nortel’s customers stopped buying
telecom equipment in the
great high-tech bust in 2001. As the industry imploded, Nortel
seemed the most secure,
until it announced huge declines in prospective sales.
1 CBC.CA News Nortel: Canada’s Tech Giant, May 2, 2005
2 CBC.CA News Northern Telecom buys American firm Nov
13, 1998
Page 4 of 10
During 2000, Nortel, with over 3.8 billion shares outstanding,
accounted for greater than
one third of the value of the entire S&P/TSX 300 composite
index. Nortel shares peaked
at the end of July 2000 at Cdn$124.50, giving Nortel a total
market capitalization of
$473.1 billion. As a secure, growing Canadian company, the
company’s shares were
held in a large number of institutional and private investor
portfolios. In addition, due to
Canada’s restrictive rules with respect to pension plans’
investing in foreign securities,
5. Nortel was the most widely held security in Canada. The shares
took a two-year slide
bottoming out in September 2002 at under Cdn$1. The once
mighty Nortel risked being
de-listed from the NYSE, which, under exchange rules, can
happen if a stock closes
below US$1 for 30 consecutive trading days.3 By 2002,
Nortel’s long-term debt was
downgraded to “junk” status.
The desperate times from mid 2000 through 2002 called for
desperate measures. Roth,
who had been named Canada’s ‘business leader of the year’ in
2000, announced in April
2001 his intention to step down as CEO . Roth was replaced as
CEO in October 2001 by
Frank Dunn (“Dunn”), CMA, Nortel’s CFO since 1999. In
2001, Nortel reduced its
workforce by 50% to 45,000 with a further 10,000 job cuts in
2002.
In the third quarter of 2002, CFO Doug Beatty directed a
company-wide analysis of
provisions. Upon completion, Controller Michael Gollogly
reported an excess of $303
million of accruals much of which had been left over from
charges taken in prior years.
Upon determination of the excess, GAAP required that the
accruals be immediately
released to income. Both Beatty and Gollgoly, officers of the
Company withheld
disclosure of their discovery from the Audit Committee and the
Board. From this point
forward, senior divisional finance managers were instructed to
report the “hardness” of
any excess provisions they were carrying in their divisional
6. records.
During the close of Q4 2002, it was determined that Nortel
would report profitability on
an “internal” pro forma basis. Under the direction of Frank
Dunn, Beatty and Gollogly
undertook another review that resulted in a “top-side” increase
of $175 million to the
reserve account producing a loss and increasing the “hardness”
of consolidated
provisions. Unlike the reserves that were identified in the
second quarter that mainly
related to previously estimated cost for restructuring these new
reserves were related to
valuations estimates on accounts receivable and inventory.
Morale at Nortel was quite low by mid 2002, after the employee
base of the company had
shrunk to one third of pre-2001 level. Bonus plans involving
stock options were
substantially “out-of-the-money.” To motivate the remaining
employees and convince
them to stay at Nortel, the board of directors established a
bonus plan tied to profitability.
One plan, called the Return to Profitability (“RTP”) bonus, was
to pay a one-time bonus
to every employee, except the 43 most senior executives, in the
first quarter the company
achieved a pro forma profit. The senior 43 executives were
eligible to receive 20 percent
of their share of the RTP bonus in the first quarter in which
Nortel attained profitability,
40 percent after the second consecutive quarter and the
remaining 40 percent upon the
3 CBC.CA News Nortel: The wild ride of Canada’s most
7. watched stock, May 2, 2005
Page 5 of 10
fourth quarter of cumulative profitability. In order for the RTP
bonuses to be paid, the
pro forma quarterly profit had to exceed the bonuses paid by at
least one dollar. Further,
the 43 executives were eligible to receive Restricted Stock
Units (“RSU’s”) tied to
internal profit targets. The RTP and RSU allocations were
based on internal, non-GAAP
metrics. Deloitte & Touche LLP who audited Nortel’s annual
financial statements did
not audit the quarterly statements upon which the bonuses were
calculated. Nortel paid
out approximately US$50 million in bonuses to the select group
of officers based on the
pro forma financial statements after profits were reported
during the second quarter of
2003. Dunn’s share was US$2.15 million.
At a Board meeting in January of 2003, management indicated
that Q1 was going to be a
loss of approximately $110 million despite the drastic
restructuring that had taken place
in previous years. By the close of the quarter, the loss had in
fact turned into a US$54
million profit in the first quarter of 2003, its first profit in three
years. This resulted in the
payment of the RTP cash bonus to virtually all employees and
the first tranche to 43
executives. Behind the scenes, Dunn and the finance team had
established “roadmaps”
8. that would achieve internal EBT targets by the timely, but non-
GAAP release of
provisions to income. The Q1 2002 results were inflated by the
release of $361 million
of accruals to income. Dunn, Beatty and Gollogly continued to
represent these
adjustments to the Audit Committee and Board as “business as
usual”.
In August 2003, Nortel posted a second quarterly profit. The
profit was the direct result
of $370 million in excess provisions released to income. The
43 executives now received
the second tranche of RTP and the RSU’s. On October 23,
2003, in the same press
release that Nortel announced third quarter earnings of US$179
million, it advised that a
restatement of previous financial statements was required. The
restatement would affect
the financial statements back to 2000, reducing previously
reported net losses and
increasing net assets.
As is often the case, the board of directors established a Special
Committee to review the
reasons for the restatement. The US law firm of Wilmer Cutler
was engaged to assist the
Special Committee in their review of the restatement. As a
result of the review, it was
determined that a second restatement of Nortel’s financial
statements would be required.
The second restatement was completed with the issuance of the
December 31, 2003
financial statements on January 10, 2005.
As a result of the review, ten employees were terminated for
9. cause including the CEO,
Frank Dunn, the CFO Douglas Beatty and the Controller
Michael Gollogly. The
remaining seven employees all held senior finance positions
throughout the global
operating units of Nortel. They were all requested to repay
bonuses received. A further
twelve senior executives who were not terminated, voluntarily
agreed to repay their
bonuses. William Owen, a former Admiral in the US Navy, and
deputy chief of the US
Joint Chiefs of Staff, replaced Dunn as CEO.
Page 6 of 10
Findings of the Independent Review4
The review of the Special Committee found that financial
statement reserves or
provisions were recorded in the general ledger and later
released in a manner not in
accordance with GAAP in all the four quarters from the third
quarter of 2002 through the
second quarter of 2003. Some of the reserves were originally
created when Nortel was
undergoing its restructuring in 2001 and had not been used but
other reserves were newly
created. It is alleged that the purpose of creating and releasing
these reserves were to
meet internally imposed earnings targets triggering payment of
cash bonuses and RSU’s.
While these reserves were not significant in dollar value to
Nortel, they had a significant
effect on the bonuses received by top management personally.
10. In the fourth quarter of 2002, Nortel would have made a small
profit on a pro forma
basis, but by creating reserves, the profit was turned into a loss.
These provisions were
later released in the first and second quarters of 2003, turning a
loss into a profit on a pro
forma basis. According to information presented in Nortel’s
annual report for 2003 and
2004, the motivation behind this manipulation was the bonus
plan which was directly tied
to unaudited quarterly pro forma profitability.
The review identified a number of management control
characteristics at Nortel which
permitted the manipulation to occur, including:
• Tone at the top that conveyed a message that earnings targets
had to be met
through whatever practices necessary, and that it was not
acceptable to question
the practices;
• A lack of technical accounting expertise within Nortel’s
finance area;
• Weak or ineffective internal controls;
• A complex corporate structure which contributed to a lack of
clear responsibility
and accountability; and
• A lack of integration between business units, which resulted in
a lack of
transparency.
It was concluded by Wilmer Cutler and reported to the Special
11. Committee that Dunn
drove senior management to achieve Earnings Before Taxes
(EBT) targets through the
use of provisions not in accordance with GAAP. They noted
that judgment is required to
set provisions, but in Nortel’s case the judgment was stretched
‘to create a flexible tool to
achieve EBT targets’.5
4 Summary of findings and of recommended remedial measures
of the independent review submitted to the
audit committee of the board of directors of Nortel. Document
released by Nortel on January 11, 2005 and
forms part of the MD&A to the 2003 annual report
5 Ibid
Page 7 of 10
Recommendations of the Independent Review
In addition to the findings Wilmer Cutler reported to the Special
Committee, it made a
series of recommendations, designed to prevent a recurrence of
the inappropriate
accounting conduct6. Many of the recommendations focused on
improving the skill set
of employees in Nortel’s finance area and strengthening internal
controls and processes.
But, their first recommendation was to establish standards of
conduct to be enforced
through appropriate discipline. One of the ways to carry out
this recommendation was
12. for the board of directors to communicate its expectations that
every employee adhere to
the highest ethical standards. The following statement was
made in Wilmer Cutler’s
report:
‘An effective “tone at the top” requires effective policies and
procedures,
but these alone are not sufficient. Those who manage and lead
the
Company, and are its officers, must exercise the highest
fiduciary duties to
the Company and shareholders and must be accountable, both to
corporate
management and the Board, for accurately reporting financial
results.’
It was further recommended that all employees should
acknowledge annually, in writing,
that he/she has read Nortel’s code of conduct and will adhere to
the code.
Following the recommendations made by Wilmer Cutler, the
board did establish the
position of a Chief Ethics and Compliance Officer in 2004.
Susan Shepard was
appointed to the position in February 2005. A lawyer by
training, she is a former
commissioner for the New York State Ethics Commission and
Chief Counsel for New
York State Commission of Investigations. The Board also
adopted a code of ethical
conduct and business practices which outlines principles to
guide ethical decision-making
and answers ethics questions that might be asked by Nortel
employees. The Wilmer
13. Cutler report also commented:
“Employees must view compliance with the Company’s code of
conduct,
standards, and control systems as a central priority, and
understand they
will be rewarded for ethical behavior, even if it uncovers some
problem
that others might prefer to remain undisclosed.”
Following the recommendations, Nortel issued a code of
conduct in 2004 titled Living the
Values: A Guide to Ethical Business Practices at Nortel
Networks7. The code addresses
all the topics one would expect, including:
• Methods to make a complaint when inappropriate activities are
occurring
• Conflict of interest related to investments, outside activities
and relationships
• General employee conduct including drugs and alcohol
• Gifts and entertainment
6 Ibid
7 For Nortel’s Code of conduct see:
http://www.nortelnetworks.com/corporate/community/ethics/col
lateral/code_of_conduct_nolinks.pdf
http://www.nortelnetworks.com/corporate/community/ethics/col
lateral/code_of_conduct_nolinks.pdf
Page 8 of 10
14. • Kickbacks and secret commissions
• Privacy and confidentiality
• Accurate and complete reporting
The 2004 code of conduct replaced the one issued in 1998 titled
Acting with Integrity
Northern Telecom’s Code of Business Conduct. While the
2004 code provided more
detail, the 1998 code covers virtually all the topics addressed in
2004. The 1998 code,
which replaced a 1995 code, advised each employee that they
had a responsibility to ask
questions if they had doubts about the ethical implications of
any situation as well as a
responsibility to report concerns about Nortel business practices
that may violate the code
of conduct. The methods for communicating these concerns are
either anonymous
hotlines or through email. Employees were also instructed to
contact the legal department
of the Business Ethics function with questions. The 1998 code
warned that serious
violations of the code could result in termination and that
actions against the law could be
subject to criminal prosecutions. Other than the length and
detail provided, the
similarities between the 1998 and 2004 code of conduct are
striking, all the way down to
the same whistle blower hot line phone numbers and email
addresses.
Outcome
Throughout 2004 Nortel repeatedly missed filing deadlines. It
was not until January 10,
2005 that the 2003 financial statements were finally issued, 12
15. months after year-end.
Nortel’s 2003 earning were US$424 million, down from the
US$732 million originally
reported. The cost of the financial review and restatement was
over US$100 million. In
addition to the work of Wilmer Cutler more that 600 Nortel
employees worked full-time
on the restatement. Nortel held more than 80 board of director
and audit committee
meeting since it was announced in October 2003 that a
restatement was necessary.8
Included in the MD&A section of the annual report was a
section titled ‘Material
Weaknesses in Internal Controls over Financial Reporting
Identified During the Second
Restatement”.9 Management addresses six identified material
weaknesses:
1. Lack of compliance with written Nortel procedures for
monitoring and adjusting
balances related to certain accruals and provisions, including
restructuring charges
and contract and customer accruals;
2. Lack of compliance with Nortel procedures for appropriately
applying applicable
GAAP to the initial recording of certain liabilities, including
those described in
SFAS No. 5, and to foreign currency translation as described in
SFAS No. 52;
3. Lack of sufficient personnel with appropriate knowledge,
experience and training
in U.S. GAAP and lack of sufficient analysis and documentation
of the
application of U.S. GAAP to transactions, including, but not
16. limited to, revenue;
8 Comments taken from Owens remarks during a conference call
explaining the restatement to the market
on January 11, 2005. See Nortel’s press release.
9 Nortel’s 2003 and 2004 Annual report, these can be found on
SEDAR or EDGAR
Page 9 of 10
4. Lack of a clear organization and accountability structure
within the accounting
function, including insufficient review and supervision,
combined with financial
reporting systems that are not integrated and which require
extensive manual
interventions;
5. Lack of sufficient awareness of, and timely and appropriate
remediation of,
internal control issues by Nortel personnel;
6. An inappropriate ‘tone at the top’, which contributed to the
lack of a strong
control environment. As reported in the Independent Review
Summary, there was
a “Management ‘tone at the top’ that conveyed the strong
leadership message that
earnings targets could be met through application of accounting
practices that
finance managers knew or ought to have known were not in
compliance with U.S.
GAAP and that questioning these practices was not acceptable”.
17. Notwithstanding the material weaknesses identified above,
Nortel’s auditors Deloitte &
Touche LLP, Toronto issued an unqualified opinion on the
restated 2003 financial
statements on January 10, 2005.
The 2004 financial statements were issued on April 29, 2005.
Nortel’s auditors again
issued an unqualified opinion, but added a fourth and final
paragraph where they “…
expressed an unqualified opinion on management’s assessment
of the effectiveness of
Nortel’s internal control over financial reporting and an adverse
opinion on the
effectiveness of Nortel’s internal control over financial
reporting because of material
weaknesses.”
While no charges have been laid to date, in April 2004 the OSC
informed Nortel that its
enforcement department was investigating the restatements.
That same month the SEC
issued a formal investigation order. In May 2004, a criminal
probe in a Dallas Texas
court subpoenaed Nortel for financial information. Finally, in
August 2004, the RCMP
Integrated Market Enforcement team announced that it had
launched a criminal probe
into Nortel’s accounting practices. In addition, there have been
numerous class action
lawsuits filed in both the US and Canada against Nortel, its
current and former officers,
directors and auditors, brought by shareholders alleging
financial improprieties following
the restatements.
18. Page 10 of 10
Required
1. In 1998 Nortel’s Code of Conduct was viewed as being
leading edge.
Notwithstanding the code of conduct, Nortel’s financial
statements were still
manipulated with the knowledge and assistance of many
employees in finance
departments throughout the organization globally. How was
this possible?
2. Given the 3.2 billion shares outstanding, the US$50 million
of bonus paid to
management seems to be relatively minor. Why did it cause
such a concern?
3. What would be the role and responsibilities of the Chief
Ethics and Compliance
Officer? What would be an appropriate reporting structure and
why? How
should the position be compensated and why?
4. CICA Assurance handbook section 5135 requires the audit
team to assess the
fraud risk associated with each engagement. What
characteristic of Nortel might
have caused it to be identified as a high-risk audit? Consider the
incentives,
rationale and opportunities for fraud.
5. Given that both Nortel’s management and auditors agree that
19. there are material
weaknesses in Nortel’s control systems, both internal
accounting controls and
management controls, how would it be possible for an auditor to
issue an
unqualified opinion on a global enterprise with revenue of
approximately US$10
billion and assets of US$17 billion?
6. Facing an uncertain future, companies are required to report
the costs associated
with downsizing. Why are provisions recorded for estimated
future costs as
opposed to reporting the costs only as incurred? What
difficulties do such
estimates pose for auditors?
NORTEL NETWORKS CORPORATION*ETHICAL
MISSTEPSLinda A. RobinsonUniversity of WaterlooJune
2005NORTEL NETWORKS CORPORATIONLearning
ObjectivesBackgroundRecommendations of the Independent
Review