Essay About Key Aspects Of New Century And Key Accounting Estimates

Accounting Case Analysis
Essay Preview: Accounting Case Analysis
Report this essay
molex Case Analysis
Case 1
1. Why do Molex have to hire an external auditor?
2. What factors do you think influenced managements decision not to raise the issue
with the auditors?
3. As a member of Molexs board, what would you do to respond to the auditors request
that the CFO (and possibly the CEO) be replaced?
Case 2
1. Analyze New Centurys business model:
a). Identify the subprime loan origination and securitization process.
b). What is the nature of competition in the sub-prime mortgage origination business?
c). Key aspects of New Centurys business model
d). What was New Centurys financial strategy?
2. Identify New Centurys risks and accounting practices – whole loan sales,
securitization as sales, and securitization as financings.
a). What were the risks to loan sales and securitizations?
b). What were the key accounting estimates that New Century needed to make for sales
risks?
c). What were the key drivers of these estimates and how these key drivers trending?
d). What was the result of the companys accounting problems?
3. Why did New Century failed?
a). Based on information in the case, what is your assessment of the quality of oversight
provided by NFCs board ? Do you think it should be blamed for the accounting
failures at company?
b). Why do you think the accounting failures at New Century went undetected for so long
despite all the changes in governance in the post-SOX era?
c). What are the general lessons, if any that the NCF case provides for boards and audit
committees.