Chapter 1, Introductory Cases Dublin Small Animal Clinic, Inc. 1 page; introductory

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Undergraduate intermediate accounting

First-year MBA/Executive MBA financial accounting

Financial reporting

Financial statement analysis

Corporate finance


  1. Dell, Inc.: Financial Restatements

24 pages; advanced

Financial restatements


Corporate governance

Judgment and accounting errors



Principles versus rule based accounting standards

After Michael Dell retired, there were allegations that senior management manipulated accounting numbers to maximize executive bonuses. Dell delayed its 2006 annual report by ten months and then restated four years of accounting financials because of the allegations and SEC investigations. The case covers 20-25 different accounting issues. It is an excellent case in that can students learn about numerous different accounting rules in a real setting, and then discuss whether the rules should even exist, since most of them do not exist under IFRS.

Dell recorded adjustments for at least 20 different accounting items, but the restatement only decreased net income by $100 million for the four years 2003-2006. The total restatement equaled only one tenth of a percent of Dell’s after tax income for the period; the investigation cost $205 million.

I usually tell students that if Dell had hired ten different accounting firms to review its financial reporting, it is likely that five would have determined that net income should have been slightly higher than reported and five would have determined that net income should have been slightly lower. The case also describes numerous changes that Dell made to its accounting organization and accounting practices, and that it made to its accounting oversight functions.

The case is excellent for classroom or for an exam, either as a take-home exam or where students are given the case in advance, and then asked questions in the exam. I have used it all three ways. The case takes 90-120 minutes to prepare for class and 4-6 hours to prepare for an exam because there are so many issues. Because there are so many issues, students learn quite a bit when preparing for the exam (similar to Revenue Recognition A and B).

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