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Oracle whistleblower suit raises questions over cloud accounting

reuters.com

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Re: Oracle whistleblower suit raises questions over cloud accounting

#51

Post by cafard »

jondubois wrote: post #33

It's horrible how large companies always try to frame whistle-blowers as 'disgruntled employees' and use the media to publicly shame them and make them unemployable. An employee who was fired (for whatever reason) is always going to be much more likely to blow the whistle than a happy employee who is still receiving pay cheques from their employer. Just because someone was fired doesn't mean that there is no substanc…

Ah, the disgruntled employee.

Many years ago, I saw a notice on a company bulletin board stating that a couple of executives had been indicted based on testimony by a disgruntled former employee. It turned out presently that he was disgruntled because he had been caught by the feds and had done a plea deal. Within a few months the executives were off to Allenwood.

Re: Oracle whistleblower suit raises questions over cloud accounting

#52

Post by needusername »

toyg wrote: post #44
needusername wrote: post #42

Earlier quoted context omitted.

> I can't think of a single Oracle product that the software engineers of today are actually excited about. Java Mission Control. Yeah 'lock-in', 'expensive' and 'inflexible' all apply but it's quite amazing.

Do you mean JRockit Mission Control? ;) a product Oracle bought, not developed...

Well BEA bought it was well.

Re: Oracle whistleblower suit raises questions over cloud accounting

#53

Post by vmateixeira »

ccrush wrote: post #36
jlarocco wrote: post #5

Earlier quoted context omitted.

I don't understand Oracle hate. Yep, they're all about making money, but at the end of the day, that's what most businesses are doing, and the ones who say otherwise are bullshitting you with crap their marketing department made up. Only in start-up bizarro world can a company give away free products and have negative or zero profit margin and be considered "succeeding". It makes no sense to me to hear people working…

Actually, companies exist to allow investors to put money up to finance a certain venture without liability for the actions of the employees and representatives of the company. So if you, for example, decided to invest in a company but do no work for that company, and then the company's employees use your money to buy a boat and attack other boats and steal their cargo and sell it for a profit then you could sell you…

Spot on

Re: Oracle whistleblower suit raises questions over cloud accounting

#54

Post by saiya-jin »

Angostura wrote: post #50
saiya-jin wrote: post #46

Earlier quoted context omitted.

those are some strong assumptions. people don't start companies to serve others, and if by any chance they won't lose money but actually earn something that would be nice. maybe that's the world you would like to see, and maybe one day we will have it, but it's not the world we currently live in. why is it so hard for some to accept that money is, overall, by far the strongest motivation force out there? Remove it, a…

> why is it so hard for some to accept that money is, overall, by far the strongest motivation force out there? Because the evidence is circumstantial at best. Money, is of course important. But the strongest motivator? Not for many people.

ok, then do that test of removing salary, indefinitely. since it's not the strongest motivator, maybe secondary one, most would still come, right? now how many would show up next day?

Re: Oracle whistleblower suit raises questions over cloud accounting

#55

Post by 6stringmerc »

Ahh, another example of "Creative Accounting" as I like to call it. Sort of like "Creative Writing," but instead of writing up a fictional story, it's about moving numbers and creating plotlines that aren't true but look pretty good on paper. My how I loathe it.

On the flip side, I would like to think one of the most talented gentlemen in such a dog-shit-ethics-gutter, Mr. Andy Fastow[1][2], would be an excellent comentator on this subject.

[1] https://en.wikipedia.org/wiki/Andrew_Fastow

[2] http://www.bloomberg.com/news/articles/2012-03-22/enrons-and...

Re: Oracle whistleblower suit raises questions over cloud accounting

#56

Post by danielconde »

firebones wrote: post #18

Can anyone with a finance/CFO background give a primer in how a) to detect such aggressive accounting in a cloud company's earnings statements and/or b) what aggressive means in this context? It would be nice to have a field guide to how to spot those without bathing suits when the tide goes out.

The gray area is how one counts revenue as cloud or non-cloud. Some software can be used in both modes, and the question is how one categorizes them. For example, Microsoft Office 365 can be used in cloud (in style of Google docs) but it can be installed locally. The gray area affects many firms, and is not isolated to Oracle.

Here is an article that may help:

http://www.theregister.co.uk/2016/01/18/cloud_sparks_boom_in...

Re: Oracle whistleblower suit raises questions over cloud accounting

#57

Post by spIrr »

runarb wrote: post #45
vectran wrote: post #34

Earlier quoted context omitted.

a) All IFRS (International Financial Reporting Standards) compliant financial statements will have a accounting policies statement preceding the 'Notes to the accounts'. This accounting policy section will outline how revenue is recognised and how this is recorded in the financial statements. There is a trend for financial market regulatories to require auditors to provide a summary of 'key audit matters' in their op…

As I understands it, some companies may also recognize the contract signing as the revenue and capitalize $13,000 for the year the contract was signed ($1000 setup and $1200 subscription pr year * 10 years). If the customers cancel the contract they may then book the lost revenue as a loss, so an annual statement with high losses may be an indicator that they booked revenue before the revenue was truly secured.

It's actually wrong to book revenues until one has satisfied the performance obligations to the customers, i.e., until the services have been provided. It means that I can't book revenues for 10 years ahead under no circumstances.

It is possible though to have something called "deferred revenues" in case the customer has pre-paid for those years (i.e., transferred the cash for the 10 years), but those are not revenues (not on the P&L), but a liability to the customer to satisfy the performance obligations (on the balance sheet), and this will be gradually released (apportioned) to actual revenues over the course of the remaining years.

Re: Oracle whistleblower suit raises questions over cloud accounting

#58

Post by spIrr »

vectran wrote: post #34
firebones wrote: post #18

Can anyone with a finance/CFO background give a primer in how a) to detect such aggressive accounting in a cloud company's earnings statements and/or b) what aggressive means in this context? It would be nice to have a field guide to how to spot those without bathing suits when the tide goes out.

a) All IFRS (International Financial Reporting Standards) compliant financial statements will have a accounting policies statement preceding the 'Notes to the accounts'. This accounting policy section will outline how revenue is recognised and how this is recorded in the financial statements. There is a trend for financial market regulatories to require auditors to provide a summary of 'key audit matters' in their op…

Good points. The new IFRS 15 tries to deal with those issues, and defines principles of performance obligations, un-bundling etc., which should be helpful in this case.

I'm sure the Big 4s have issued Q&As and position papers to their audit clients already on the adoption of IFRS 15, but this is going to be a nightmare to implement...

Re: Oracle whistleblower suit raises questions over cloud accounting

#59

Post by tremon »

saiya-jin wrote: post #54
Angostura wrote: post #50

Earlier quoted context omitted.

> why is it so hard for some to accept that money is, overall, by far the strongest motivation force out there? Because the evidence is circumstantial at best. Money, is of course important. But the strongest motivator? Not for many people.

ok, then do that test of removing salary, indefinitely. since it's not the strongest motivator, maybe secondary one, most would still come, right? now how many would show up next day?

Basic income is a great way to test that, yes.

Re: Oracle whistleblower suit raises questions over cloud accounting

#60

Post by arcticfox »

TheOtherHobbes wrote: post #41
simula67 wrote: post #32

Earlier quoted context omitted.

Both of you may be right. The company exists to make money for the shareholders. But to make money for shareholders it has to treat its customers well, it has to treat its employees well, it has to treat its partners well and it has to obey all the laws. Management who value these things are often referred to as having 'high levels of integrity'. Good shareholders should look for management exhibiting high levels of…

>But to make money for shareholders it has to treat its customers well, it has to treat its employees well, it has to treat its partners well and it has to obey all the laws. Sadly not. One of the tragedies of capitalism is that it's much easier to run a profitable business by sharking everyone than by being a good citizen. The optimal ethical position for profit is not the same as the optimal abstract ethical positi…

> This is why markets are a bad thing.

... well, that's extreme. The ownership of the company should be working to avoid long term disaster. In most industries this happens all the time.

Actually, some of the main instances they don't (financial industry) is because of government support. If you're allowed to fail and get bailed out, then there's no reason to avoid disaster.

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