Nama : Dicky Prayoga

NPM : 16311061

Cases
1) Whistle-Blower Claims Accounting Shenanigans at SuccessFactors

Discussion Questions
1. In the end, SuccessFactors investors were not hurt by this alleged improper accounting
because SAP paid such a high premium to acquire the firm, which helped SAP jump-start
its cloud computing business. Was anyone hurt by this alleged improper accounting and,
if so, who and how?
2. Should management encourage the reporting of non-GAAP financial measures that
may be useful to investors? Why or why not?
3. What sort of measures should the management teams of service companies put in place
to ensure that there is no improper accounting of multiyear contracts?

Answer :
1. SuccessFactors was doing misleading accounting and the company was accused for
the same by a whistleblower, a salesperson of SuccessFactors. He also reported the
authorities that SuccessFactors salespeople were improperly writing the contracts to
make to company look as growing faster. SuccessFactors was reporting the SEC
without the backlog figures. When asked by SEC why it was eliminated, the company
said it didn’t think that investors found it useful.

No one got hurt with the improper accounting of SuccessFactors and the investors
lucked out. When SAP bought SuccessFactors, it conducted its own internal
investigation on how the backlog numbers are missed.

But it is a great lesson to the investors who were rewriting the existing contract as a
new one, even though the client was not a new customer. Now, they need to look
carefully about the revenue and the customer number.

2. Non-GAAP financial measures are used by company management to understand and

compare operating results in accounting, to calculate bonus payment, to evaluate
management’s financial performance and many more. Company provides the
investors with these non-GAAP financial measures as a supplement to their reported
results. Non-GAAP financial measures are meaningful to the investors because the
company review the cash flow generated from the operations which is a necessary
component of the ongoing operation.
 The use of non-GAAP financial measures have limitation as it does not reflect all
items of income and expense hence, the company’s cash position. So, companies
have prepared non-GAAP financial measures in accordance with GAAP. Hence,
management should encourage the non-GAAP financial measures not as not as
substitute or in isolation form but in accordance with GAAP.

3. Some company managements have taken preventing measures to avoid improper

accounting. One of them is to establish a system of internal controls to assess risk
associated with accounting department. These internal controls are verified regularly
to check its proper functionality.

Also, an employer should be kept responsible to do periodic check all the contracts,
customer number, revenues and other important factors on regular basis to avoid any
fraud or miswriting. Random sampling can also be done. Company should ensure that
the rules are followed by the employees or else they will be punished. Periodic
training and other measures should be structured to strengthen the ethics of
employees. Periodic job rotation will make the employees difficult to do misbehavior

2) IBM and the State of Indiana Involved in a Breach of Contract Dispute

Discussion Questions
1. Experienced observers point out that the development of a state social services system
is always exceedingly difficult. Multiagency interaction and interdependence often
leads to delays and complications in getting requirements finalized and agreed upon.
And even if that is accomplished, changes in welfare policies by the state or federal
government can render those requirements invalid and require considerable rework.
Given the problems that IBM encountered on this contract, should it decline the
future opportunities it may have to propose a new solution for a state social services
system?
2. Present a strong argument that the state of Indiana is entitled to reimbursement of all
funds paid to IBM as well as reimbursement of all overtime employees were paid due
to fixing problems associated with the new system. Now present a strong argument
that IBM should be allowed to keep all funds it has received so far for this new
system
3. Read about the judge’s recent ruling in this case (www.govtech.com/health/Nobody-
Winsin-Indiana-vs-IBM-Lawsuit-Judge-Says.html). Do you agree or disagree with
the ruling? Provide three reasons to support your opinion
 Answer :
1. No, it should not decline the future opportunities it may have to propose a new
solution for a state social service system. Making something new from scratch is
always tough especially when it need lots of update because of frequent change in
system. But it doesn’t mean that company should back off and give up. Challenging
difficult task and achieving it is one of the key factors of company success. Most of
the state social services system are of big budget and can have lots of benefits to
company. Getting it done not only generate profit to the company but also reputation
of the company.
2. Strong argument for the state of Indiana for reimbursement of all funds paid to IBM.
a) FSSA began to notice problem in new systems as early as the projects initials
rollout to 10 counties.
b) FSSA secretary set a deadline to improve the system but IBM failed to make the
proposed improvements to the satisfaction of the state.
c) Breach of contract by IBM.
d) The system processing errors resulted in incorrect denials of benefits and delays
in processing claims bringing harms to in need citizens.
Strong argument for the IBM to allow keep all funds it has received.
a) There were delays in system because there were an insufficient number of
workers to handle the claims
b) During contract negotiation, FSSA specified that the systems be able to handle
up to 4200 application per month but the number of applications exceeded
10000 per month
c) New system had reduced fraud that was estimated to cost over $100 million
per year, led to creation of 1000 new jobs, and reduced Indiana operating
expenses by $40 million per year.
3. I agree with the ruling. Judge said nobody win in this case as we can see mistake done
by both party. My three reasons to support my opinion are follows:
a) a)While making contract agreement, the FSSA didn’t specify properly the
actual job of the system. For example, they only mentioned system need to
handle up to 4200 application per month but in real there was more than
10000 per month.
b) b)IBM breach the contract by not improving the system as deadline set by
FSSA.
c) c)There were delays in the system because there were insufficient workers to
handle the claims

3) When Certification Is Justified

Discussion Questions
1. How can organizations and vendors change their certification programs to test for skills as
well as core knowledge? What issues might this introduce?

2. What are the primary arguments against certification, and how can certifying bodies change
their programs to overcome these shortcomings?
3. What are the benefits of certification? How might certification programs need to change in
the future to better serve the needs of the IT community?

Answer :

1. Organization and vendors can take interview, aptitude, technical and entrance test for
new candidates to test for skills and core knowledge. Since people need to pay large
amount of money for training and certification, those mentioned test can replace
certification program.
2. They suspected the vendors offer certification simply as a marketing ploy and a source of
revenue and accused organization managers using certification as “a crutch, a poor but
politically defensible substitute for knowing what ad how well ones subordinates are
doing.” To overcome these shortcomings, certifying bodies can change their programs by
minimizing the certification test cost, training cost if possible free online training. If they
able to provide free online training and minimize the test cost then I think it would
certainly overcome the arguments against certification.
3. Some of the benefits of certification are follows:
a) Employers make good use of certification as hiring gate both for entry-level position
and for jobs that require specific core knowledge.
b) It also uses means of training employees and increasing skills level within the
company.
c) Some companies use certification as a perk to attract and keep good employees.