Accountability of Ex-HP CEO in Conflict of Interest Charges:

How could a CEO and chairperson of the board of directors of a major company resign in disgrace over a personal relationship with a contractor that led to a sexual harassment charge and involved a conflict of interest, a violation of the code of ethics? It happened to Mark Hurd on August 6, 2010. Hurd was the former CEO for HewlettPackard (HP) for five years and also served as the chair of the board of directors for four years. On departure from HP, Hurd said he had not lived up to his own standards regarding trust, respect, and integrity.

The board of directors of HP began an investigation of Hurd in response to a sexual harassment complaint by Jodie Fisher, a former contractor, who retained lawyer Gloria Allred to represent her. While HP did not find that the facts supported the complaint, they did reveal behavior that the board would not tolerate. Subsequent to Hurd’s resignation, a severance package was negotiated granting Hurd $12.2 million, COBRA benefits, and stock options, for a total package of somewhere between $40 and $50 million.

In a letter to employees of HP on August 6, interim CEO Cathie Lesjak outlined where Hurd violated the “Standards of Business Conduct” and the reasons for his departure. Lesjak wrote that Hurd “failed to maintain accurate expense reports, and misused company assets.” She indicated that each was a violation of the standards and “together they demonstrated a profound lack of judgment that significantly undermined Mark’s credibility and his ability to effectively lead HP.” The letter reminded employees that everyone was expected to adhere strictly to the standards in all business dealings and relationships and senior executives should set the highest standards for professional and personal conduct.

The woman who brought forward the sexual harassment complaint was a “marketing consultant” who was hired by HP for certain projects, but she was never an employee of HP. During the investigation, inaccurately documented expenses were found that were claimed to have been paid to the consultant for her services. Falsifying the use of company funds violated the HP Standards of Business Conduct.

As for the sexual harassment claim, Allred alleged in the letter that Hurd harassed Fisher at meetings and dinners over a several year period during which time Fisher experienced a number of unwelcome sexual advances from Hurd including kissing and grabbing. Fisher said that this continual sexual harassment made her uncertain about her employment status.

In August 2013, HP and former CEO, Mark Hurd, won dismissal of a lawsuit that challenged the computer maker’s public commitment to ethics at a time when Hurd was allegedly engaging in sexual harassment.

HP did not violate securities laws despite making statements such as a commitment to be “open, honest, and direct in all our dealings” because such statements were too vague and general, U.S. District Judge Jon Tigar in San Francisco wrote.

As a result, shareholders led by a New York City union pension fund could not pursue fraud claims over Hurd’s alleged violations of HP’s standards of business conduct, the judge ruled.

“Adoption of the plaintiff’s argument (would) render every code of ethics materially misleading whenever an executive commits an ethical violation following a scandal,” Tigar wrote.

Shareholders led by the Cement & Concrete Workers District Council Pension Fund of Flushing, New York, claimed in their lawsuit that the share price had been fraudulently inflated because of Hurd’s alleged activities.

They also claimed that HP’s statements about its rules of conduct implied that Hurd was in compliance, and that Hurd ignored his duty to disclose violations.

At most, Tigar said, such statements “constitute puffery—if the market was even aware of them.”

Tigar also said Hurd’s alleged desire to keep his dealings with Fisher secret did not by itself give rise to a fraud claim.

“Nothing suggests that Hurd thought that he could mislead investors with the statements the court finds were immaterial,” the judge wrote.

Questions:

1. When he was CEO, Hurd wrote in the Standards of Business Conduct at HP that “We want to be a company known for its ethical leadership….” His message in the preface continued: “Let us commit together, as individuals and as a company, to build trust in everything we do by living our values and conducting business consistent with the high ethical standards embodied within our SBC.”

What is the role of trust in business? How does trust relate to stakeholder interests? How does trust engender ethical leadership? Evaluate Mark Hurd’s actions in this case from an ethical and professional perspective.

2. Despite hundreds of pages of policies, codes of ethics, organizational values, and carefully defined work environments and company culture, lapses in workplace ethics occur every day. Explain why you think these lapses occur and what steps might be taken by an organization to ensure that its top executives live up to values it espouses.

3. Leo Apotheker, the former CEO of HP who succeeded Mark Hurd, resigned in September 2011, after just 11 months on the job—but he left with a $13.2 million severance package. Hurd left with a package between $40 million and $50 million. Do you think executives who resign from their positions or are fired because of unethical actions should be forced to give back some of those amounts to the shareholders to make them whole? Why or why not?

Discussion Question

Cash in Hand Topic: Revenue Recognition/Misrepresentation of Fact by Client Characters: Heather Hunter, Senior in CPA firm “Buzz” Thompson, Owner/manager of Fashion First Sandy, part-time bookkeeper of Fashion First Author: Mary Brady Greenawalt, Associate Professor of Business Administration, The Citadel Co-author: Janine Cloutier, Virginia Tech

In addition to the usual mix of compilation, review, and audit clients for which Heather Hunt serves as a senior in a small office of a regional CPA firm, she has been assigned a new client that recently engaged the firm. Fashion First, an incorporated retail outlet, is a thriving local store. The business is run by a single owner/manager, “Buzz” Thompson, who makes all major decisions. The business has not previously used the services of a CPA firm. In addition to preparation of financial statements, the CPA firm will handle tax returns for the business. At her first visit to the client’s office, Heather is introduced to Sandy, the part-time bookkeeper who is also a full-time accounting student at the local university. At a subsequent meeting, Sandy confides to Heather that she found the job at the beginning of the semester after an extensive search. Sandy really needs the money to help finance her education, and feels lucky to have found a good-paying job during the current economic downturn. Feeling that Heather is someone she can talk to and get advice from, Sandy describes a situation that has been on her mind for some time now. Sandy’s concern relates to the handling of sales revenues. When monies from sales revenues are counted and deposited on a weekly basis, a chart is filled out with categories carefully delineating the type of payment: cash, checks, American Express, or Visa/Mastercard. Sandy’s employer, after depositing the weekly total, brings this chart back with his own written-in total of the actual amount deposited. After looking over some of these weekly deposit chats, Sandy noticed that $500 cash was missing from each deposit. After a more thorough inspection of monthly tax documents that “Buzz” Thompson has filled out, Sandy noticed that the reported monthly gross revenue was $2,000 less than what had been actually counted. The employer is the only person handling the money after it has been counted. He is also the only one to deposit the money. When Sandy asked Mr. Thompson about revenue not being reported for tax purposes, he assured her that every dollar of income was reported on the tax forms. Furthermore, “Buzz” asserted, since Sandy wasn’t the person who signed the forms, she shouldn’t be concerned.

Questions: Explain your reasoning for each question in full length! What are the Ethical Issues? Who are the Primary Stakeholders? What are the Possible Alternatives? What are the Ethics of the Alternatives?

2.3. Each of the following scenarios presents a claim by a researcher. Assume that the sample sizes in each case was in the range of 20 to 25 observations per sample in each case. Answer the following for each scenario:

(i) state the appropriate null (HO) and alternate hypothesis (HA) in symbolic form (e.g. Hx : Meanleft = Meanright);

(ii) indicate whether it is a 1or 2-tailed test, and if a 1-tailed tests which tail is the area of rejection at.

A. Outside of the nesting season, male and female Robins do not differ in weight. An ornithologist thought however that females gained extra weight prior to nesting. She captured and weighed 20 adult females (F) and 22 males (M) from the same location just as they were started to build nests.wanted to know if this was also true during the nesting season.

B. A resident of Peterborough thinks the city is unusual in that the north end of the city (near Trent University) gets less rainfall than the south end (of the city (near Peterborough Airport). Data were collected for all rain events greater than 4 mm from weather stations at the University (TU) and the airport (PA) from April 1 to November 30 2019.

C. Whether the intensity of rain events (cm/hr) in August (AUG) differ from those in May (MAY) in Peterborough county.

D. A Professor wonders whether it is true that students actually spend more time (hours per week) on course work (ie “attending lectures” and doing assignments) in his online course(ON) compared to the same course taught face-to-face (F2F) in the same semester. He surveyed 25 students from each of the two courses.

   Slide 11 problem:

   5’ UGG 3’ -  mRNA

                      -Template DNA stand

  -Nontemplate DNA strand

Slide 33 problem:

The following sequence of nucleotides in a DNA strand was used as a template to synthesize a mRNA that was then translated into protein:

                        5’-TTAACGGCTTTTTTCCAT-3’

Predict the C-term aa and the N-term aa of the resulting polypeptide.

Slide 34 problem:

True or False? Explain your answer!

1.An individual ribosome can make only one type of protein.

2.The large and small subunits of an individual ribosome

always stay together and never exchange partners.

3.An mRNA may contain the sequence ATTGACCCCGGTCAA

Slide 35 problem:

A mutation in DNA generates a UGA stop codon in the middle of the mRNA coding for protein X. You are studying protein X and isolating it from mutated cells. Which one best describes your findings:

1. No changes whatsoever are found between protein X isolated from wild type and mutant cells
2. Protein X from wild type cells is shorter than the one from mutant cells
3. Protein X from wild type cells is longer than the one from mutant cells
4. Protein X from mutant cells has a new function

Problem 6-4AA Periodic: Alternative cost flows LO P3

Montoure Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales transactions.
  

  
Required:
1. Compute cost of goods available for sale and the number of units available for sale.
  

  
2. Compute the number of units in ending inventory.


  
3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification units sold consist of 790 units from beginning inventory, 205 from the February 10 purchase, 295 from the March 13 purchase, 145 from the August 21 purchase, and 520 from the September 5 purchase. (Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.)
  


4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.)

Problem 5-3A Perpetual: Alternative cost flows LO P1

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 200 from the February 10 purchase, 150 from the March 13 purchase, 140 from the August 21 purchase, and 365 from the September 5 purchase.

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

5. The company’s manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

• Weighted Average

• FIFO

• Specific Identification

• LIFO

Montoure Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales transactions. Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 790 units @ $85.00 per unit Feb. 10 Purchase 495 units @ $82.00 per unit Mar. 13 Purchase 295 units @ $67.00 per unit Mar. 15 Sales 895 units @ $115.00 per unit Aug. 21 Purchase 290 units @ $90.00 per unit Sept. 5 Purchase 690 units @ $86.00 per unit Sept. 10 Sales 1,060 units @ $115.00 per unit Totals 2,560 units 1,955 units Required: 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification units sold consist of 790 units from beginning inventory, 205 from the February 10 purchase, 295 from the March 13 purchase, 145 from the August 21 purchase, and 520 from the September 5 purchase. (Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.) 4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.)

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

    
Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 540 units from beginning inventory, 220 from the February 10 purchase, 100 from the March 13 purchase, 70 from the August 21 purchase, and 360 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

rev: 10_23_2017_QC_CS-104883, 11_09_2017_QC_CS-108457, 02_24_2018_QC_CS-119467, 04_06_2018_QC_CS-123768, 02_08_2019_QC_CS-156418, 03_15_2019_QC_CS-162654

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Problem 5-3A Perpetual: Alternative cost flows LO P1

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 620 units from beginning inventory, 210 from the February 10 purchase, 120 from the March 13 purchase, 140 from the August 21 purchase, and 390 from the September 5 purchase.

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

5. The company’s manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

• LIFO

• Weighted Average

• Specific Identification

• FIFO

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions

Required:
1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 600 units from beginning inventory, 260 from the February 10 purchase, 150 from the March 13 purchase, 150 from the August 21 purchase, and 385 from the September 5 purchase.

4. Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

5. The company’s manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

• Specific Identification

• FIFO

• Weighted Average

• LIFO