What are implications of Casella Waste Systems changing its year end from April 30 to December 31?

Casella Waste Systems, Inc., is a solid waste services company operating primarily in the eastern United States. Its fiscal year end has historically been April 30.  In recent years, the region has experienced severe weather in the spring.  The severe weather would drive down earnings for Casella in the last few months of its fiscal year ending April 30 by delaying the traditional spring upswing in business and by increasing operating costs.

Casella management decided that it would rather face the potential of severe spring weather and its related financial impacts early in each fiscal year so that it would have time to react to the financial impact of any severe weather and make certain operating adjustments if necessary.  Casella is now changing its year end to December 31, a calendar year end. By changing to a calendar year end, the spring season and its severe weather risk is shifted to early in the year rather than at the end of the year as with a fiscal year end of April 30. Severe weather does not happen every spring, but if it does, Casella management will have the remainder of its new fiscal year to adjust for that impact by managing costs, adjusting capital expenditures, and using other tactics.

Additional information about the change of year end can be found in Casella’s press release dated June 25, 2014, at http://ir.casella.com/releasedetail.cfm?ReleaseID=856559 .

Questions

  1. What stakeholders (entities) will be effected by the change in year end?  Explain how each of these stakeholders will potentially be impacted.
  2. What are the advantages to the change in year end?  What are the disadvantages?
  3. Is Casella permitted by U.S. GAAP to change its year end from April 30 to December 31? What accounting characteristic would this change of year end normally violate?
  4. Casella will be required to provide restated financial information for the revised year end.  Why is it required to provide this financial information?

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions. The YouTube video link below is a narration of the blog post article (no discussion questions are included in the YouTube video; those can be assigned separately.)

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)
  • YouTube video (narrated article in shareable YouTube link)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

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