Companies rely on their accounting department to ensure that the organizations finance is well recorded and accounted accurately in order to assess the financial situation of the company. However, regardless of the size of the company, accounting issues still occurs at some point because of inefficiencies. AT&T and T-Mobile, which are among the biggest names in wireless telecommunications service also experiences problem with accounting due to some factors. AT&T for example experience discrepancies in accounting, payroll and pension distribution. The problem begins when the company receives disputes from its employees regarding payroll and mount of petitions on pension benefits that the company was still not able to provide. On the other hand, T-Mobile is also dealing with the same dilemma due to the company’s non-consolidation of the customer’s bill with their collection agencies.
The issue is about the two company’s accounting inefficiency, problem such as discrepancies in payroll and pension distribution for AT&T and T-Mobile’s billing disputes. Billing disputes experience by customers of T-Mobile has an immense impact on the company’s financial statement. This is because the amount being billed to customers are already considered as sales and having customers disputing over their billing statements mean delays on T-Mobile’s accounts receivable collections. The credit extended to customers poses a huge financial risk to the company and delayed collection of accounts receivable generally shrinks the company’s revenue. AT&T’s accounting problem on pension and post-retirement benefits has cumulative effect on the company’s financial statement because of the adjustments that need to be done on liability, income tax and benefit expenses (AT&T).
Accounting problems encountered by AT&T and T-Mobile are just a few of what other companies often experience. However, accounting problems does not only constitute financial effect because it also has an adverse effect on investor confidence reflecting on stock market responses. Companies are facing dilemma due to restatements caused accounting irregularities. The restating companies have a higher possibility of having their stock market price to plunge. If losses appeared in company restatement, it has a ripple effect on investor confidence and market trends because of revenue recognition (United States General Accounting Office).
The accounting issues described for both companies are different in nature and is not related to know another. Other companies in the same industry responded on the issues by reviewing their own accounting strategies. Other companies view the issues as an opportunity to take advantage of the market. Having problems with pension and billing disputes enable other companies to strengthen their own approach in pension distribution and billing methods to avoid delays on collecting receivables and restatements. During the time the issue is occurring, other companies didn’t made announcements regarding the accounting issues. However, accounting problems was among the subject of discussion in the 2012 World Conference on International Communications. It was discussed in the conference that telecommunication companies should create a general framework and mutual agreements to that will address its accounting difficulties. Fortunately, the accounting issues faced by AT&T and T-Mobile were not critical enough to create a major shift in stock market movement during the time it occurred.
United States General Accounting Office. “Financial Statement Restatement: Trends, Market Impacts, Regulatory Responses, and Remaining Challenges.” GAO-03-138 Financial Restatements (2002): n.pag. Print.
AT&T. “Notes to Consolidated Financial Statements.” Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting (2011): 64-98. Print.