Name: Sania Batool

SAP: 23756
Semester: BSCS 8th
Topic: Case Studies
Date: 22nd March, 2024
Submitted to Mam Sidra
1. In the end, SuccessFactors investors were not hurt by this alleged improper accounting
because SAP paid such a high premium to acquire the firm, which helped SAP jump-start its
cloud computing business. Was anyone hurt by this alleged improper accounting and, if so,
who and how?
Because of SAP's high-profile acquisition, investors in SuccessFactors may not have been immediately
harmed by the alleged incorrect accounting. Other stakeholders, though, might have suffered as a result.
For example:

 Consumers: If revenue recognition procedures were distorted, it may deceive consumers about
SuccessFactors' stability and sound financial standing, which could damage their confidence and
willingness to pay for the company's services.
 Employees: Salespeople may have been encouraged to act unethically in order to increase
commissions, which might have a negative impact on trust and morale within the company.
 Regulatory Authorities and Public Trust: The company's reputation may suffer as a result of the
reported accounting problems, which would undermine public trust.

2. Should management encourage the reporting of non-GAAP financial measures that may be
useful to investors? Why or why not?
When assessing the reporting of non-GAAP financial measures, management should proceed with
caution. Although these metrics can yield extra insights, they can also be twisted or misconstrued,
resulting in false information and possible damage to investors. In order to avoid deceiving stakeholders,
management should promote clear and transparent reporting procedures and make sure that any non-
GAAP measures are supported by appropriate disclosures and explanations.

3. What sort of measures should the management teams of service companies put in place to
ensure that there is no improper accounting of multiyear contracts?
To protect themselves from unethical accounting practices linked to multiyear contracts, management
teams of service organizations should have strong internal controls and processes in place. Among the
actions are:

 Segregation of Duties: To avoid fraud and collusion, make sure that distinct people are in charge
of contract discussions, approvals, and accounting.
 Frequent Audits: Examine contract documents, revenue recognition procedures, and accounting
standard compliance on a frequent basis by conducting internal audits.
 Education and Awareness: Give staff members thorough instruction on moral conduct,
accounting principles, and the repercussions of unethical activity.
 Whistleblower Procedures: Provide avenues via which staff members can anonymously voice
issues without worrying about facing consequences, promoting openness and responsibility in
the company.
 Independent Reviews: Hire outside experts or auditors to routinely check contracts and
bookkeeping procedures for accuracy and compliance.