Case #1
Texas Instruments
Chris Healey

Chris Healey
Intermediate Accounting
Professor Henry
10/19/2014
This case study is inspired by the SEC issued Proposed Rule 33-8098, “Disclosure in Managements’ Discussion and Analysis about the Application of Critical Accounting Policies” and how current companies live up to the objectives of this rule. For this case, I selected Texas Instruments (NASDAQ: TXN), one of the leading designers and manufacturers of semiconductors. This case will evaluate the degree to which Texas Instrument’s financial reports give the investor relevant information and faithfully represent the company’s true financial standing. This is the primary objective of Proposed Rule 33-8098. In addition, I will address the importance of the disclosure of critical accounting policies, the critical accounting policies that TXN discussed, why they are critical, how these policies align or contradict with the conceptual framework of financial reporting and if I believe that TXN may have left out some critical accounting policies. It is important for a company to disclose its critical accounting policies because investors use financial reports in investing decisions. The purpose of financial reporting is to provide investors with relevant information that faithfully represents the company’s financial standing. Unfortunately, this purpose is difficult to deliver. Accounting is by nature influenced by the inexact science of estimation, the ever-changing business world and human error both innocent and criminal. Any business student at Seton Hall knows how ethical issues are unavoidable and one does not have to look far to find numerous examples of criminal greed in business. However, Proposed Rule 33-8098 is focused on correct reporting practices that make it easier for investors to understand financial reports, as seen in the following two quotations