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There were quite a few items of notice from the Sunbeam case but the ones that I particularly

interesting were the creative ways Al Dunlap produced profits. One of these ways was with the extra spare parts that Sunbeam had used to fix blenders and barbeque grills when they broke. Sunbeam stored these parts in a warehouse owned by the company EPI Printers who would send the parts out when they were needed. Sunbeam came up with a plan to sell these parts to the EPI Printer Co for 11 million dollars and make an 8 million dollar profit. However EPI did not think the parts were worth that much and placed a value of 2 million on the parts. Not to be dissuaded Sunbeam soon found workaround the problem by convincing EPI to sign an agreement to agree to purchase the parts for $11 million but a clause allowing them to walk away from the deal. The parts never did get sold to EPI but the profits from the deal were posted to Sunbeams account. Philip Harlow, the Arthur Andersen partner in charge of the sunbeam audit had come to the conclusion could not be allowed under generally accepted accounting rules. Sunbeam had agreed to reduce it to $8 million but would not go any lower. Harlow could have took the stance of not signing off on the audit if Sunbeam was insistent on including the profits but for whatever reason he decided the profit was not material allowing him to sign off on the audit on the basis that the audit opinion said the financial statements were presented fairly in all material respects. The part that was presented was immaterial so it didnt matter. But the SEC did not agree with Harlow assessment of what was material and said that he had allowed items that he had challenged which made up 16 percent of Sunbeam annual profit. Arthur Andersen soon found them in a very dangerous predicament. After the blow up at Sunbeam they signed a new audit that dropped all profits that had been claimed as fraudulent by the SEC. They had to pay over a $100 million to settle a shareholder lawsuit but still maintain Harlow did nothing wrong. Another item of note that Sunbeam engaged in was the use of the cookie jar technique. Dunlap allegedly led the scheme to create an illusion of a quick turnaround soon after his arrival to the company in 1996. He inflated the losses from the old management team that were previously reported and added the inflated income to the current year to make it seem the company was already doing a lot better after a short period of time. Sunbeam also engaged in channel stuffing which encouraged companies to purchase more products than they needed which resulted in increased revenues for the company. This type of strategy only has a short term effect on companies as all it does is shift revenue from future years to the current year.

Wilson, Catherine. "Jacksonville.com: SEC Sues Dunlap, Others over Sunbeam 'cookie-jar' Accounting 5/15/01." Jacksonville.com: SEC Sues Dunlap, Others over Sunbeam 'cookie-jar' Accounting 5/15/01. Florida Times-Union, Apr.-May 2001. Web. 04 Nov. 2012. <http://jacksonville.com/apnews/stories/051501/D7C0OLEO0.html>.

Kravitz, Rick. "AccountingWEB." The 'Big 8' Generally Unacceptable Accounting Principles (GUAP) and the Introduction of Socially Responsible Accounting (SRA). N.p., 20 Aug. 2009. Web. 04 Nov. 2012. <http://www.accountingweb.com/topic/tax/big-8-generally-unacceptableaccounting-principles-guap-and-introduction-socially-responsi>. Norris, Floyd. "They Noticed the Fraud but Figured It Was Not Important." The New York Times. The New York Times, 18 May 2001. Web. 04 Nov. 2012. <http://www.nytimes.com/2001/05/18/>. Norris, Floyd. "THE INCOMPLETE RSUM: A Special Report." The New York Times. The New York Times, 16 July 2001. Web. 04 Nov. 2012. <http://www.nytimes.com/2001/07/16/business>. "A Lesson From the Past: Sunbeam's 1990s Fluff." A Lesson From the Past: Sunbeams 1990s Fluff. N.p., n.d. Web. 04 Nov. 2012. <http://www.credittoday.net/public/3523.cfm>.

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