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Chapter # 2 Ethics Case 1: 1. Whistle-Blower Claims Accounting Shenanigans at Successfactors Questions

This document contains summaries of two ethics cases: 1. The first case discusses allegations of improper accounting at SuccessFactors to inflate revenue and questions around encouraging non-GAAP financial measures and ensuring proper accounting of multi-year contracts. 2. The second case discusses a breach of contract dispute between IBM and the state of Indiana over a new social services system that encountered delays and complications. It presents arguments around whether IBM should decline future state social services contracts and whether Indiana or IBM should retain funds from the disputed contract.

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Belllaa Edward
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395 views2 pages

Chapter # 2 Ethics Case 1: 1. Whistle-Blower Claims Accounting Shenanigans at Successfactors Questions

This document contains summaries of two ethics cases: 1. The first case discusses allegations of improper accounting at SuccessFactors to inflate revenue and questions around encouraging non-GAAP financial measures and ensuring proper accounting of multi-year contracts. 2. The second case discusses a breach of contract dispute between IBM and the state of Indiana over a new social services system that encountered delays and complications. It presents arguments around whether IBM should decline future state social services contracts and whether Indiana or IBM should retain funds from the disputed contract.

Uploaded by

Belllaa Edward
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Chapter # 2 Ethics

Case 1: 1. Whistle-Blower Claims Accounting Shenanigans at SuccessFactors

Questions:

1. In the end, SuccessFactors investors were not hurt by this alleged improper accounting because
SAP paid such a high premium to acquire the firm, which helped SAP jump-start its cloud
computing business. Was anyone hurt by this alleged improper accounting and, if so, who and
how?

2. Should management encourage the reporting of non-GAAP financial measures that may be
useful to investors? Why or why not?
3. What sort of measures should the management teams of service companies put in place to
ensure that there is no improper accounting of multiyear contracts?
Case 2: 2. IBM and the State of Indiana Involved in a Breach of Contract Dispute

Questions:

1. Experienced observers point out that the development of a state social services system is
always exceedingly difficult. Multiagency interaction and interdependence often lead to
delays and complications in getting requirements finalized and agreed upon. And even if
that is accomplished, changes in welfare policies by the state or federal government can
render those requirements invalid and require considerable rework. Given the problems that
IBM encountered on this contract, should it decline the future opportunities it may have to
propose a new solution for a state social services system?

2. Present a strong argument that the state of Indiana is entitled to reimbursement of all funds
paid to IBM as well as reimbursement of all overtime employees were paid due to fixing
problems associated with the new system. Now present a strong argument that IBM should
be allowed to keep all funds it has received so far for this new system.
3. Read about the judge’s recent ruling in this case (www.govtech.com/health/Nobody-Winsin-
Indiana-vs-IBM-Lawsuit-Judge-Says.html). Do you agree or disagree with the ruling?
Provide three reasons to support your opinion.

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