5. Your answer should demonstrate your critical analysis skill with substantive discussions of the drivers, consequences, and preventions of the earning management practices in the case.;

Sunbeam, a maker of small consumer appliances such as Mr.Coffee, has drawn much attention in recent years for its disappointing financial results and cutthroat tactics of its former CEO, "Chainsaw Al" Dunlap. The nickname was given to Mr Dunlap for how he cut the size of the employee base.

In mid-November 2000, the SEC concluded its investigation into accounting practices at Sunbeam. The SEC charged that Sunbeam recognized revenues prematurely from sales promotions with retailers in 1997. This activity was before the dismissal of Sunbeam's infamous CEO, who was terminated in 1998. Although not discussed in the SEC ruling, it would not be surprising if the stress of the environment contributed to the aggressive revenue recognition.