Callmate Telips – Choice of Accounting Policy Harvard Case Solution & Analysis

Callmate Telips Telecom Limited (Callmate) was in the telecommunications industry, in which the regulation and control have been phased out by the Government of Pakistan in the context of economic deregulation program. Callmate was a pioneer in pay phones and prepaid phone card industry in Pakistan and has significant potential for development into a major economic entity. Developments in the case shows that the strategy of the company, as well as aggressive management of the stock price, can be dangerous if it were not checking the director. All directors Callmate were close family members and audit committee consisting of three directors. External audit firm that audits were Callmate Ferguson AF & Co (Ferguson), and they were a branch of Price Waterhouse Coopers International. Ferguson was one of the main professional accounting firms in Pakistan. Callmate as was listed on the Karachi Stock Exchange, it was obliged to publish their financial quarterly thereafter considered Ferguson. The company received permission in early 1995 to enter the international long distance market, which was previously a state monopoly company Pakistan Telecommunication Corporation Limited (PTCL). The disagreement between the auditors and the company's accounting policies related to revenue recognition, used in the financial half year ended December 2005. This debate, and the company is trying to manage its share price has led to a number of problems that have been made public, as the company was trying to tarnish the auditors. The case considers corporate governance, the role of external auditors and holding the board and regulator of public listed companies. There were a number of events that led to a profitable company to quickly become a pariah on the Stock Exchange and to be excluded from the exchange. "Hide
on Muntazar B. Ahmed Source: Richard Ivey School of Business Foundation 15 pages. Publication Date: December 11, 2008. Prod. #: 908N28-PDF-ENG

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