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Analysis Tools

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Analysis Tools
Unit 5 Individual Project
ACCT205-1205B02
Instructor Jean Riese
AIU Online
Kristina M Langan
February 10, 2013

Overtsock.com (the company) received some negative publicity in 2010 after the company made their relationship with external auditors. The company then had to restate their published financial statements going back to 2008. The surrounding issues were that overstock.com had improperly deferred income that it earned but had under-billed its fulfillment partners during prior reporting periods (Q3 of 2008 and before) by moving these such incomes to different future reporting periods (Q4 of 2008, Q1 of 2009, Q2 of 2009, and Q3 of 2009). So this means overstock.com took prior reporting period income (Q3 of 2008 and before) and moved it to future reporting periods (Q4 of 2008 and later) because this materially overstated its financial performances in these later reporting periods. (Anatar, 2010). The Big O also admitted that it incorrectly amortized the expense related to restrict stock units based on the actual three year vesting schedule rather than a three year straight line amortization and applied an outdated forfeiture rate in calculating its expenses under the plans. While they were at it, they threw a bunch of other corrections that were not material either individually or in the aggregate, as the saying goes (Newquist, 2010). Once this type of magnitude is reached by an accounting error, it generally involves a number of top-lever company officials in both the executive and accounting departments. The accounting department’s core responsibilities are to provide managers and investors with information to make decisions. Management is responsible for a company’s financial statements. The most material and important impact is of the first point which is a blatant attempt of the company to publish misleading financial

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