The Consulting Division of IBM Corporation is often involved in assignments for which URM C23-40. computer equipment is sold as part of a systems installation. The Computer Equipment Divison is frequently a vendor of the Consulting Division in cases for which the Consulting Division pur chases the equipment from the Computer Equipment Division. The Consulting Division does not view itself as a sales arm of the Computer Equipment Division but as a strong competitor to the nsulting firms of information systems. The Consulting Division's goal is to maximize its h IBM equipment it can sell. If profit contribution to the company, not necessarily to see how muc the Consulting Division is truly an autonomous investment center, it has the freedom to purchase equipment from competing vendors if the consultants believe that a competitor's products serve the needs of a client better than the comparable IBM product in a particular situation. REQUIRED
a. In this situation, should corporate management be concerned about whether the Consulting Division sells IBM products or those of other computer companies? Should the Consulting Division be required to sell only IBM products?
b. Discuss the transfer-pricing issues th both the Computer Equipment Division manager and the Consulting Division manager shd consi ler. If top management does not have a policy on pricing transfers between these two divisions, what alternative transfer prices should the division managers consider?
c. What is your recommendation regarding how the managers of the Consulting and Computer Equipment Divisions can work together in a way that will benefit each of them individually and the company as a whole?

Each of the following scenarios is based on facts in anactual fraud. categorize each scenario as primarily indicating (1) anincentive to commit fraud, (2) an opportunity to commit fraud, or(3) a rationalization for committing fraud. also state your reasoningfor each scenario. a. there was intense pressure to keep the corporation ' stock from declining further. this pressure came from investors, analysts, and the ceo, whose financial well-being was significantly dependent on the corporation ' s stock price. b. a group of top-level management was compensated (mostly in the form of stock-options) well in excess of what would be considered normal for their positions in this industry. c. top management of the company closely guards internal financial information, to the extent that even some employees on a “need-to-know basis” are denied full access. d. managing specific financial ratios is very important to the company, and both management and analysts are keenly observant of variability in key ratios. key ratios for the company changed very little even though the ratios for the overall industry were quite volatile during the time period. e. in an effort to reduce certain accrued expenses to meet budget targets, the cfo directs the general accounting department to reallocate a division’s expenses by a significant amount. the general accounting department refuses to acquiesce to the request, but the journal entry is made trough the corporate office. an accountant in the general accounting department is uncomfortable with the journal entries required to reallocate divisional expenses. he brings his concerns to the cfo, who assures him that everything will be fine and that the entries are necessary. the accountant considers resigning, but he does not have another job lined up and is worried about supporting his family. therefore, he never voices his concerns to either the internal or external auditors. f. accounting records were either nonexistent or in a state of such disorganization that significant effort was required to locate or compile them.

Consider a treasury bill with a rate of return of 5% and the following risky securities: security a: e(r) = .15; variance = .0400 security b: e(r) = .10; variance = .0225 security c: e(r) = .12; variance = .1000 security d: e(r) = .13; variance = .0625 the investor must develop a complete portfolio by combining the risk-free asset with one of the securities mentioned above. the security the investor should choose as part of her complete portfolio to achieve the best cal would be a. security a b. security b c. security c d. security d

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