Assignment 11.1: Resources Unlimited Review William Thomas Bellevue University

1. Assignment 11.1: Resources Unlimited Review William Thomas Bellevue University

2. Table of Contents Company Background and Leadership Communication Accounting Practices Baseline Profits Oil and Gas Account Totals Salaries for Entry Level Management Discrimination Lawsuit Avoidance

3. Company Background and Leadership • Background • Merger of 2 natural pipeline companies in 1985 • Largest gas distribution network in the U.S. • 38,000 miles of pipeline stretching from the Southwestern and Mountain states to the Northeast and Midwest • Leadership • New CEO with the merger • Questionable ethics related to accounting standards • Poor vision for the company • Ineffective communicator

4. Communication • CEO vision on use of derivatives and hedges not clearly communicated • Memo from accountants on derivative model ignored • Input from accountants should have happened beforehand • No meeting to discuss memo regarding profit projections • No feedback to the accountants on the memo • Company unable to produce projected earnings for Wall Street

5. Accounting Practices • Resources Unlimited financial statements • Clearly not provided by the accountants • Do not reflect objective evidence • Not choosing a conservative method or reporting • Profit Structure (see slide 9 for reported profits 1986-1988 by quarter) • Questionable profit based on problematic derivative model • Questionable sales figures reported to media • Questionable Wall Street baseline

6. Baseline Profits 1986-1988

7. Oil and Gas Account Totals • Direct variance between oil and gas accounts • Oil accounts in 1988 – 64 • Reported accounts in 1990 – 86 • Gas accounts in 1988 – 32 • Estimated accounts based on direct variance – 43

8. Salaries for Entry Level management • Pay for each position varies (common) • Experience prior to starting at Resources Unlimited • Time in position at Resources Unlimited • Performance in position • Percentage of annual increase based on performance • Range is typically 2%-4% of base salary per year • Entry/Midpoint/Maximum for each pay grade • Pay range for this entry level position has a range $25,000 • Entry level with no experience starts at $32,000 • Entry level with experience starts no higher than midpoint of $44,500 (exceptions possible)

9. Discrimination Lawsuit Avoidance • Potential pay discrepancy noted with 5 accountants • Female employee paid - $32,000 • Salaries for 3 highest paid employees (all male) - $50,000, $52,000 and $55,000 • Mean salary for 3 highest - $52,333.33 • Standard Deviation of - $2516.61 • Raise required to be within 2 standard Deviations - $15,300.11 (new salary of $47,300.11)