Copyright © Ivory Research Co Ltd, 2020. Haflich, F. (2014) “If GAAP goes, says higher to taxes and cyclicality”.
Due to cultural factors in the US (discussed under Social Context), a rules-based approach regulates the US financial sector in its adopting, implementing and enforcing of rules and regulations (Zapranis and Tsinaslanidis 2012). View Notes - Autonomy Case Study.pdf from ADM 4340 at University of Ottawa. The HP and Autonomy Case in an Institutional Context. 2020, https://www.paperdue.com/essay/accounting-scandal-of-hp-and-autonomy-190443. FASAC plays an important role in advising FASB on issues that may influence the GAAP rules by communicating representative views from diverse groups of individuals that would be affected by FASB’s influence: chief executive officers, senior partners of public accounting firms, senior members of academic and analyst communities, and so on (Walker 2004). Focus on the following -. It has been identified that the differences in revenue recognition policies adopted by HP and Autonomy was one of the major causes of the merger scandal. Gornik-Tomaszewski, S. and McCarthy, I. N. (2003) “Cooperation between FASB and IASB to achieve convergence of accounting standards”. Order a Leadership & Managing People case study solution now, To Search More HBR Case Studies Solution Go to Fern Fort University Search Page. Consequently, FIFO would mean that companies gain a larger profit margin, which would be perceived to be attractive by investors. CPA Journal 85 (5), 48-53. Although IASB had been able to encourage the incremental adoption of IFRS in many countries, especially in Group of 20 (G20) as shown in Diagram 3, the US remains unyielding to selective criteria such as the flexible approach in revenue recognition that FASB does not endorse (James 2012).
To write an emphatic case study analysis and provide pragmatic and actionable solutions, you must have a strong grasps of the facts and the central problem of the HBR case study. Satin, D. and Lin, R. (2009) “Is there LIFO after IFRS?” Academy of Accounting and Financial Studies 14 (2), 53-56. Walker, R. S. (2004) “The effect of recent US legislation and rule making on corporate compliance and ethic programmes”. Another way of understanding the external environment of the firm in HP's Acquisition of Autonomy is to do a PESTEL - Political, Economic, Social, Technological, Environmental & Legal analysis of the environment the firm operates in. On August 18, 2011, Hewlett Packard, under the leadership of then-CEO Léo Apotheker, announced a friendly acquisition of U.K.-based Autonomy, a market leader in the management of structured and unstructured data for business management solutions, for $11.1 billion. This signifies that Americans are more inclined to maintaining their self-interest than the harmony of a group of individuals, with a higher possibility of manipulation in companies’ financial statements by individuals with authority (Hofstede 2015). You can even identify the source of firm's competitive advantage based on PESTEL analysis and Organization's Core Competencies. However, many conflicting opinions in accounting standards that are rooted in national cultures continue to hinder the project’s progress. Discussion of the Influence of the Social Context. http://autonomyaccounts.org/an-open-letter-to-hp/
Shortly after Hewlett-Packard appointed Leo Apotheker to lead the company, the board approved the acquisition of the UK-based software company, Autonomy. (2014) “The impact of principles-based and versus rules-based accounting standards on auditors’ motivations and evidence demands”. Was this acquisition a strategic fit to HP? Once you finished the case study implementation framework. 's Claims 'Completely and Utterly Wrong'. Implementation framework differentiates good case study solutions from great case study solutions. However, VSOE’s concept of fair value does not exist in IFRS (PWC 2012).
However, in the UK, the Serious Fraud Office (SFO) has closed its investigation into Autonomy because it deemed there was insufficient evidence for a realistic prospect of conviction. [online] Available at: http://autonomyaccounts.org/ [Accessed 2 June 2015]. [pdf] Available at: https://www.pwc.com/en_US/us/issues/ifrs-reporting/publications/assets/ifrs-and-us-gaap-similarities-and-differences-2012.pdf [Accessed 20 June 2015]. All Rights Reserved, We use cookies which you can view and control, Inappropriately accelerating revenue recognition with value-added resellers and creating revenue where no end-user existed at the time of sale (Autonomy Accounts 2015), Incorrectly recognising revenue for long-term arrangements of hosted deals (Autonomy Accounts 2015), Held for sale in the ordinary course of business (IAS 2015), Used in the process of production for sale (IAS 2015), Materials or supplies to be consumed in the production of inventory or in the rendering of services (IAS 2015).
IAS (2015) Overview of the structure of the IFRS Foundation and IASB. Web.4 November. E-Finance 9 (3), 33-41.
Case study solutions can also provide recommendation for the business manager or leader described in the business case study. An example of highly specialised guidance is the software revenue recognition, which is a major contributing factor to the scandal between HP and Autonomy (Shapiro 2013). . [online] Available at: http://www.ft.com/cms/s/0/d1a91f1a-9fd9-11e4-9a74-00144feab7de.html#axzz3eGkrsxgY [Accessed 21 June 2015].
Until now, both entities have been engaged in a lawsuit to determine who was to blame for the write down. If the fair value were not established, the company would have to defer recognising all revenue until the last element of the contract was delivered (Grant Thornton 2011). Review of Business 24 (2), 52. Send your data or let us do the research. Peytcheva, M., Wright, A. M. and Majoor, B.
Forbes (2012) Hewlett-Packard’s Autonomy allegations: A material writedown puts all four audit firms on the spot. Therefore, Autonomy could be acquitted from HP’s allegation in the UK as IFRS encourages a flexible approach for companies to achieve true and fair representation in its financial statements (Kanagaretnam, Lim and Lobo 2014). In this case, HP had trouble fusing Autonomy into its other operations from the start. Autonomy (2009) Annual Report 2009. Business environments are often complex and require holistic solutions. As observed in Diagram 2, Americans tend to be slightly more individualistic than British people. Collins, D. L., Pasewark, W. R. and Riley, M. E. (2012) “Financial reporting outcomes under rules-based and principles-based accounting standards”. (2014) “IASB and FASB convergence project: Where are they now?” Global Conference on Business and Finance Proceedings 9 (1), 665-674. The case provides an opportunity for students to analyze the corporate strategy of HP, examine HP's financial performance overall and its various business segments, determine how and if Autonomy fits in with HP, and value the acquisition using discounted cash flow (DCF) and multiples analyses.