Financial

Sunset 1

Sunset Medical

Scott Wandler*

University of New Orleans

College of Business Administration

New Orleans, LA 70148

SWandler@UNO.Edu; (985) 264-9827

Kevin Watson

Iowa State University

College of Business Administration

Ames, IA 50011

KWatson@iastate.edu; (515) 294-2275

ABSTRACT

Sunset Medical is based on a real situation occurring at an Orthopedic Medical practice in

Colorado. While attending a trade show Dr. Jones, the managing partner at Sunset Medical, was

approached by a medical consulting firm, Physicians Medical Inc. (PMI), to provide the practice

billing and administrative services. Dr. Jones decided to hire PMI and signed a contract with

February of 2006. Based on the interim financial statements that were released in June of 2006,

Dr. Jones gave PMI control of the overall day to day operations of the practice. PMI immediately

relieved the office manager of her duties and took over all operations of the practice. In early

2007, the 2006 financial statements were released and were not as impressive as the mid-year

results. Dr. Jones is now worried that the increased power given to PMI may have been a mistake

and has asked you to give a full assessment of the situation.

The case is suitable for an introductory Financial or Managerial Accounting class at the M.B.A.

level once the students have a working knowledge of the financial statements. The students must

critically evaluate contract language and financial statements to examine ethical dilemmas that

face businesses.

KEYWORDS: Case; Ethics; Contract Language; Forensic Accounting; Comparative Financial

Statements; Critical Thinking; Statement of Cash Flows; Financial Accounting; Managerial

Accounting

Electronic copy available at: http://ssrn.com/abstract=1662655

Sunset 2

Sunset Medical

Introduction

Dr. Sally Jones, a practicing Orthopedic Surgeon, is the managing partner at Sunset

Medical1, a professional corporation located in Colorado. Sunset, which...