IMA Educational Case Journal
Volume 2, Issue 4
MY CPA SAVED ME MILLIONS . . . OR DID HE? A Case Study of Professional Ethics and the SC2 Tax Planning Strategy
Robin Boneck, David S. Christensen
This case study explores the role of the CPA in providing tax planning services to clients using a sophisticated and creative tax planning strategy developed by a fictitious CPA firm for its clients. It provides a framework to teach students ethical standards governing tax practice and rules regulating tax practice before the IRS. It also provides an opportunity for students to contemplate and develop personal standards of practice prior to being confronted with an actual ethical dilemma in practice.
Keywords: tax shelters, professional ethics, and professional duties.
Newport Home: Multichannel Merchandising and Inventory Management
Regina M. Anctil, P. Jane Saly, Michael E. Borneman
This case requires students to model and analyze a decision under uncertainty. The retail firm in this case has multiple distribution channels for disposal of overstock and excess seasonal inventory, and is faced with the choice of determining the best method of disposing of the inventory. Students are exposed to the typical constraints faced in brick-and-mortar retail operations, one of which is the problem of overstock as a byproduct of in-store merchandising. They are asked to contrast these operations with the opportunities and constraints inherent in selling through an Internet channel. Students are asked to define the immediate differential costs and benefits of three disposal alternatives. Students must draw upon incomplete financial data to analyze the question and decide what costs and benefits can be quantified. They must also assess the risk imposed by factors whose costs cannot be estimated with the information available.
Keywords: decision analysis, differential analysis, overstock inventory, multichannel distribution, and cost behavior.
Creating Incentives for Change by Keeping Score
Linda L. Brennan, D. David McIntyre
This case, based on an actual situation, describes the efforts of Elite Engineering, an engineering consulting firm, to involve more of the engineers and technical staff in business development in addition to their regular billable work. Specifically, the intent is to shift away from the traditional base of clients and increase the revenue stream from industrial consulting. Previous efforts to achieve this shift have failed. In the current situation, the chief operating officer (COO) plans to change the company’s existing bonus system to create goal congruence between individuals and the organization. He believes that the engineers’ current incentives need revision in order to change how their time is spent. He wants to use a balanced scorecard approach that is aligned with the company’s five year goals. The case concludes with the COO sharing a draft scorecard with engineers for their reaction.
Keywords: balanced scorecard, consulting services, agency theory, and goal congruence.