Respond to the following:

Acquired immune responses are capable of controlling an infection, however, the acquired immune response is controlled itself through different mechanisms. It is primarily activated by a threshold level of antigen that is produced through the defensive action of the innate immune system. Pathogens and antigens interact and cause dendritic cells to activate to become antigen-presenting cells. Then, the antigens are transported to the lymphoid organs by the antigen-presenting cells. After several days, antigen-specific T cells and B cells locate the foreign antigen, and ultimately differentiate into armed effector cells. These cells either leave the lymphoid organ to go to the sites of infection or stay within the organ to promote humoral immunity. The path the effector cells take is dependent on the differentiation of CD4 T cells. There are two different subsets of CD4 T cells, Th1 and Th2. The function of Th1 is to activate macrophages, while Th2 works to activate B cells, especially during the primary response. Both of these CD4 T cell subset are capable of regulating each other, which is essential done by the cytokines of each respective T cell type. Ultimately, the effector cells remove the pathogens to control the infection (1). Once an infection is effectively under control, it is critical to remove the effector cells to allow for the restoration of the tissue. The immune system has mechanisms in which it is capable of removing these cells. When effector cells are no longer needed, they undergo apoptosis. The function of effector cells is to remove the stimulus that activated them, but when that stimulus is gone, the effector cells no longer have anything to remove except for themselves, which occurs through apoptosis. Apoptosis causes cells to die, and they are subsequently removed through macrophages. They are capable of identifying the dying cells through the composition of their membrane, specifically the lipid phosphatidylserine. In a normal cell, the lipid is found on the inner portion of the plasma membrane. However, when a cell undergoes apoptosis, it redistributes to the outer surface which allows for easy recognition by phagocytes. While some effector cells are removed, some are retained to allow for formation of memory T-cell and B-cells (1). The acquired protective immune response is critical in providing protection against pathogens. It is acquired through effector T cells or antibodies that are generated when exposed to the pathogen, as described above. This can be done by initial infection or through vaccination that allows for immunological memory. The specific pathogen involved influences the type of effector T cell or antibody that provides protection. For example, the polio inactivated vaccine utilizes preexisting antibodies (IgA) to neutralize the virus and prevent its spread of infection (1). These antibodies are known as IgA, and are produced within the gut mucosa. In order to activate the mucosal immune response, antigens are transported across the epithelium through the use of microfold (M cells). They are then presented to effector B lymphocytes that result in stimulated B cells to migrate to distant mucosal cites. This ultimately leads to the production of IgA that neutralizes the antigen. The neutralization of these substances prevents it from binding to receptors within the tissue. Therefore, the neutralized antibody-antigen complex formed is ultimately removed and destroyed by macrophages (2).

(Cash Flow Reporting)

Brockman Guitar Company is in the business of manufacturing top-quality, steel-string folk guitars. In recent years, the company has experienced working capital problems resulting from the procurement of factory equipment, the unanticipated buildup of receivables and inventories, and the payoff of a balloon mortgage on a new manufacturing facility. The founder and president of the company, Barbara Brockman, has attempted to raise cash from various financial institutions, but to no avail because of the company's poor performance in recent years. In particular, the company's lead bank, First Financial, is especially concerned about Brockman's inability to maintain a positive cash position. The commercial loan officer from First Financial told Barbara, “I can't even consider your request for capital financing unless I see that your company is able to generate positive cash flows from operations.”

Thinking about the banker's comment, Barbara came up with what she believes is a good plan: With a more attractive statement of cash flows, the bank might be willing to provide long-term financing. To “window dress” cash flows, the company can sell its accounts receivables to factors and liquidate its raw materials inventories. These rather costly transactions would generate lots of cash. As the chief accountant for Brockman Guitar, it is your job to tell Barbara what you think of her plan.

Instructions

Answer the following questions.

Cash Flow Reporting)

Brockman Guitar Company is in the business of manufacturing top-quality, steel-string folk guitars. In recent years, the company has experienced working capital problems resulting from the procurement of factory equipment, the unanticipated buildup of receivables and inventories, and the payoff of a balloon mortgage on a new manufacturing facility. The founder and president of the company, Barbara Brockman, has attempted to raise cash from various financial institutions, but to no avail because of the company's poor performance in recent years. In particular, the company's lead bank, First Financial, is especially concerned about Brockman's inability to maintain a positive cash position. The commercial loan officer from First Financial told Barbara, “I can't even consider your request for capital financing unless I see that your company is able to generate positive cash flows from operations.”

Thinking about the banker's comment, Barbara came up with what she believes is a good plan: With a more attractive statement of cash flows, the bank might be willing to provide long-term financing. To “window dress” cash flows, the company can sell its accounts receivables to factors and liquidate its raw materials inventories. These rather costly transactions would generate lots of cash. As the chief accountant for Brockman Guitar, it is your job to tell Barbara what you think of her plan.

Instructions

Answer the following questions.

(a)  

What are the ethical issues related to Barbara Brockman's idea?

(b)  

What would you tell Barbara Brockman?

1. The NetCare Company, which operates assisted-living facilities, is planning to issue or sell shares of stock to accredited investors. Briefly explain whether each of the following individuals would qualify as an “accredited investor” under the SEC’s Reg. D. [Note: Materials in Appendix B are useful in answer this exercise.]
   1. Amy Smith is the chief executive officer (CEO) of NetCare Company.
   2. Bruce Jones, who has a net worth of $750,000 , is planning to purchase shares of stock to be issued by NetCare Company.
   3. Jean Wu also is considering purchasing shares of stock that will be issued by NetCare Company. Jean’s annual income has been $250,000 in each of the past two years, and she expects to have a comparable amount of income next year.
   4. James Shastri is a software programmer for NetCare Company.
   5. Julie Kukoc recently inherited some financial assets and now has a net worth of $2 million with an annual income of $35,000.

During the 2^ndquarter of 2016 (June 2016 – August 2016) Ping-Pong Industries (located at 535 Main Street, Brentwood, NY 11717; Sales Tax ID# 44455566677) had total sales of $126,000. Of this amount, $21,000 were non-taxable. All of the sales were made in Suffolk County, and the company does not report gross credit card and debit card sales. This is not the final sales tax return for the company, and the company pays the sales tax amount that is due when filing the form. The company does not use a third-party designee, and prepares the sales tax forms on its own. The forms are signed by Alton Thompson, the CEO of the company (phone number: 631-555-8476, no e-mail address), and are filed on the due date for the form.

Based on the instructions that have been provided for Form ST-100, complete Form ST-100 of Ping-Pong Industries for the 2^ndquarter of the year.

A financial service company is aware that customers are being charged fees for receiving financial advice that will not be given. This is in breach of the company’s own code of conduct and consumer law. Senior management delay remediation in an effort to meet their own sales targets. Complaints by customers and whistleblowers are ignored at all levels in the company.

In your own words, critique the following statement by the CEO:

“ ... this is our normal business practice, everyone else in the industry is doing the same, and our company has a policy of being socially responsible at all times. Our risk culture is exemplary and supports our growth strategy.”

Answer ALL of the following questions in your own words:

1. Explain whether this company, in your opinion, has a sound risk culture.
2. Describe what consequences could arise for this company from its compliance failure.
3. Discuss what actions management could take in order to improve compliance risk.

Acme Materials Company manufactures and sells synthetic coatings that can withstand high temperatures. Its primary customers are aviation manufacturers and maintenance companies. The following table contains financial information pertaining to cost of quality (COQ) in 2019 and 2020 (in thousands of dollars):

Required:

1. Classify the cost items in the table into cost-of-quality (COQ) categories.

2. Calculate the ratio of each COQ category to revenues in each of the 2 years.

3. Calculate the percentage change in each COQ category and total COQ and comment on the results:

a. Percentage change in total COQ as a percentage of sales, from 2019 to 2020;

b. Total COQ in 2020 expressed as a percentage of 2019 sales dollars;

c. Percentage change in total prevention costs, 2019 to 2020;

d. Percentage change in total appraisal costs, 2019 to 2020;

e. Percentage change in total internal failure costs, 2019 to 2020;

f. Percentage change in total external failure costs, 2019 to 2020.