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St. Camillus is a fictional non-profit hospital in rural Maine facing a serious budget deficit. As Director of Marketing, Victoria Stern is building a team to modernize the hospital fundraising efforts. An interview with a promising candidate who is also a digital native forces her to confront shifting attitudes toward issues of data and privacy across generations against the backdrop of continued cybercrime and data breaches within the healthcare industry. Students grapple with the tension between data as "useful" or private within an organization. In this context they explore the ethical issues they will face around data security and data governance in their roles as managers.

Supplement for product 9B18B013.

Among only a handful of early adopters of a new revenue recognition mandate for calendar year 2017 annual reports, beginning of the year retained earnings for Ford Motor Company (Ford) was adjusted $36 million higher while General Dynamic's was adjusted down by $301 million, both a result of their early adoption of the new revenue recognition guidelines. A new revenue recognition mandate, she noted three important points.

Anna Amphlett, a financial analyst with Tasmanian LLC, gathered information about Castlight Health, Inc., a company whose shares Tasmanian was considering acquiring for its cloud infrastructure portfolio. Castlight provided a cloud-based health solutions platform to its customers for an upfront subscription fee. Castlight experienced substantial growth in revenues over the last five years, but the company had not yet reported a bottom-line profit since its initial public offering (IPO) in 2014. Castlight Health was one of many companies that provided cloud-based computing services and were often referred to as software-as-a-service (SaaS) companies. Castlight Health sold substantially all of its services through its direct sales organization which paid its sales force commissions for acquiring customer contracts. Tasmanian's portfolio manager had asked Amphlett to scrutinize the company's accounting methods, particularly its revenue and expense recognition methods. Upfront revenue recognition and capitalizing and amortizing some indirect outlays were well-known methods for enhancing a company's bottom line. Castlight Health had become quite wary of companies such as salesforce.com, ADT, and Pre-Paid Legal Services, which experienced significant stock price declines after popular press articles criticized their accounting policies. In some cases, the U.S. Securities & Exchange Commission (SEC) had launched an investigation into a company's accounting practices following the critiques. These critiques invariably questioned management's integrity while an SEC investigation distracted management's time and energy from the running the business.

Terrell Manufacturing (Terrell) was a small-scale producer of manifolds in Cleveland, Ohio. In late 2015, one of its clients decided to outsource the manifolds it had been producing in-house and approached Terrell with a proposal: Terrell could buy its equipment and produce the manifolds for the client. Terrell needed to quote a production rate based on the hourly cost of operating the equipment to make the client's manifolds. The rate needed to include the total cost of production, which involved processes in addition to those that were carried out on the purchased equipment. Terrell also needed to propose a payment plan for the machine.

Terrell Manufacturing (Terrell) was a small-scale producer of manifolds in Cleveland, Ohio. In late 2015, one of its clients decided to outsource the manifolds it had been producing in-house and approached Terrell with a proposal: Terrell could buy its equipment and produce the manifolds for the client. Terrell needed to quote a production rate based on the hourly cost of operating the equipment to make the client's manifolds. The rate needed to include the total cost of production, which involved processes in addition to those that were carried out on the purchased equipment. Terrell also needed to propose a payment plan for the machine.

Historically, data analytics have not been used in the professions of accounting and auditing to the extent that they have been in other industries. However, an understanding of big data and the relevant analysis techniques is more often becoming mandatory for accountants and auditors so that they can provide greater business insights for their businesses and clients. This note prepares readers for using big data and data analytics by providing an overview of data analytics, explaining how data analytics techniques can be used in accounting and auditing practices, and providing a tutorial that walks students through a basic use of ACL Analytics.

Supporting material to accompany product 9B18B013.

Supporting material to accompany product 9B18B013.

Supporting material to accompany product W18517.

Supporting material to accompany product W18517.

Historically, data analytics have not been used in the professions of accounting and auditing to the extent that they have been in other industries. However, an understanding of big data and the relevant analysis techniques is more often becoming mandatory for accountants and auditors so that they can provide greater business insights for their businesses and clients. This note prepares readers for using big data and data analytics by providing an overview of data analytics, explaining how data analytics techniques can be used in accounting and auditing practices, and providing a tutorial that walks students through a basic use of ACL Analytics.

This case follows VP of Marketing, Jill Wehunt, and analyst Mark Morse as they tackle a predictive analytics project to increase sales in the Mom & Baby unit of a nationally recognize retailer, PriceMart. Wehunt observed that in the midst of the chaos that surrounded a new baby, parents' shopping habits became quickly ingrained. She hypothesized that if she could get households expecting a new baby to make PriceMart a part of their routines before becoming parents, she might keep them as customers for the next several years, winning significant additional revenue. Technical topics covered: Collecting data and preparing a dataset; constructing training, validation, and holdout sets; cross-validation; Linear regression as a modelling technique; statistical tests; Logistic regression as a modelling technique for estimating predictions between 0 and 1; maximum likelihood estimation; log likelihood; Comparing model outputs.

This case builds directly on the case Predicting Purchasing Behavior at PriceMart (A), in which VP of Marketing, Jill Wehunt, and analyst Mark Morse build a logistic regression model to predict whether a customer household is expecting a baby. In this case, Wehunt and Morse are concerned about the logistic regression model overfitting to the training data, so they explore two methods for reducing the sensitivity of the model to the data by regularizing the coefficients of the logistic regression. Wehunt and Morse then compare the models and select the model most effective at correctly classifying households as expecting. Students explore the relationship between the model's confusion matrix, which organizes the model's correct and incorrect classifications, the cutoff point on the curve that matches true positives and true negatives, and the payoff matrix Wehunt and Morse construct. Students can then follow the link directly from their model to their marketing strategy. Technical topics covered: Ridge logistic regression (or L2 regularization) as a modelling technique; Lasso logistic regression (or L1 regularization) as a modelling technique; Comparing models, thinking about coefficients, and selecting model for deployment; Evaluating model output; ROC curve, cutoff point, confusion matrix; payoff matrix as a framework for utilizing the model to carry out marketing strategy.

This case follows Bill Booth, marketing manager of a regional wine distributor, as he applies unsupervised learning on data about his customers' purchases to better understand their preferences. Specifically, he uses the K-means clustering technique to identify groups of customers who have purchased any number of 32 specific "deals" Booth offered over the year, differentiated by the wine varietal as well as its country of origin and a minimum number of bottles to purchase. Insights from this analysis may help him understand themes across the deals that can inform construction of new deals in the future. Topics include: Unsupervised learning; similarity and proximity; K-means clustering, with measures of Euclidean distance and cosine similarity; Gaussian mixture models; interpreting clusters.

This case builds directly on Chateau Winery (A). In this case Bill Booth, marketing manager of a regional wine distributor, shifts to supervised learning techniques to try to predict which deals he should offer to customers based on the purchasing behavior of those customers closest to them. Topics include: Supervised learning; collaborative filtering; K-nearest neighbor as a modeling technique; collaborative filtering with cosine similarity of customers; collaborative filtering with cosine similarity of products; comparison of different prediction models.

In May 2018, Berkshire Hathaway announced an unprecedented loss of more than $1 billion for the first quarter of 2018. Warren Buffett blamed this loss on the new accounting rules for equity securities which he criticized. In the case 'Fair Value Accounting at Berkshire Hathaway, Inc.' students will evaluate the impact of a new rule related to the fair value accounting as it pertains to Berkshire Hathaway and Alphabet. Students will debate the topic of relevance and reliability in fair value accounting as compared to historical cost accounting and discuss the intended purposes of the balance sheet and income statement (with particular attention to net income). Students will also have a chance to review the business model of Berkshire Hathaway to debate how to measure and report the economic performance of Berkshire Hathaway.

This technical note explores the many different forms of equity compensation. Equity compensation, defined as compensation that provides for the delivery of equity securities, aligns employees' incentives with shareholder value driven by a company's stock price. Equity compensation is used extensively to attract and retain key employees. However, the types of equity compensation differ in their effects on incentives, dilution, net income, corporate cash flow, and income taxes.