| Course | AC599 Graduate Capstone in Accounting |
|---|---|
| Unit | Unit 7 |
| Paper type | Findings summary |
| Length | About 740 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Accounting |
| Updated | October 2026 |
Free sample paper for AC599 Unit 7
Three Findings on Page One: A Unit 7 Capstone Findings Summary on an Understated Health Reserve
[Student Name]
Purdue University Global
AC599: Graduate Capstone in Accounting
Unit 7 Findings Summary
[Instructor Name]
[Date]
Hollis Creek Supply, its lender and every figure are composite; the standards, actuarial guidance and text cited are real.
Memorandum
To: Chief Financial Officer Copy: Controller From: Capstone Analyst Date: January 20, 2027 Re: Findings on the December 31, 2026 health claims liability
Finding 1: The Reserve Is Short by $213,300
The recorded liability for incurred but unpaid health claims is $410,000. The best estimate from Hollis Creek's own claims history is $661,300 gross, with a separate $38,000 stop-loss receivable, a net cost of $623,300. Measured net, the reserve falls $213,300 below the estimate. The estimate's range, $571,000 to $684,000, does not include the recorded amount. The method passed a hindsight test on 2025, coming within 2.4 percent of actual run-out, while the one-month rule missed by 35 percent.
Consequence: expense and the liability are both understated. Recording the adjustment reduces pretax income by $213,300.
Finding 2: The Covenant Effect Depends on the Bank's Definitions
Most of the shortfall is not new. At December 31, 2025, the reserve was already short by $208,200, so 2025 expense was understated by that amount and 2026 expense absorbed it as claims were paid. Only $5,100 of the shortfall arose in 2026.
How the bank measures coverage decides what happens next. Fixed charges are about $4.1 million. If the full $213,300 adjustment is included in 2026 earnings for the covenant, coverage falls from 1.22 to about 1.17, below the 1.20 floor. If the bank's definitions allow the prior-year portion to be treated as an out-of-period adjustment and excluded, coverage stays at about 1.22. The credit agreement defines the earnings measure as "net income as reported, adjusted for non-recurring items as agreed by the lender," which leaves the treatment open.
Consequence: the year-end certificate cannot be prepared until the treatment is agreed with the bank.
Finding 3: The Cause Was a Rule Set Once and Never Tested
The one-month rule was adopted when the plan converted to self-funding three years ago, on the assumption that claims are paid within a month. Hollis Creek's own data shows about 16 percent of a month's cost remains unpaid a month later and 6 percent two months later, with smaller amounts trailing. No one tested the rule against the data, which the administrator provided every month.
Consequence: without a policy based on claims history, the error will recur, and the January deductible change will lengthen the payment pattern further.
Each finding pairs a figure with what it means for someone outside the accounting department, because the chief financial officer has to act on the bank question this week and on the policy before the next quarter closes.
Why These Three and Not Others
The analysis produced other observations, such as a provider refund that briefly distorted one month's data and the administrator's steady processing speed. They matter to the method but do not change what the chief financial officer must decide. The three findings above are the ones that require action: an entry, a conversation with the bank and a policy. Keeping the summary to those three keeps it usable on a busy day in January.
What Did Not Change
Operating cash flow is unaffected; the adjustment is an accrual. The stop-loss receivable is probable and stands on its own.
Method in Brief
The estimate used completion factors from thirty-six months of claims for older months and a per-member projection for the two newest, reconciled to the cash funded to the administrator, under the accrual standard for contingencies and actuarial guidance on incurred health claims (Financial Accounting Standards Board, 1975; Actuarial Standards Board, 2011). Details are in the analysis draft.
What the Chief Financial Officer Should Do This Week
Call the bank's relationship manager, share the analysis and ask how the lender wants the prior-year portion treated. Ask the controller to draft the adjusting entry and the out-of-period evaluation, so both are ready when the bank answers.
The policy and quarterly process can wait a few weeks; the bank cannot.
Prior-Period Treatment
Because the $208,200 relates to 2025, the controller should evaluate whether it is material to either year. If it is not, it can be corrected in 2026 with disclosure as an out-of-period item, which also supports the bank conversation (Kieso et al., 2019).
References
Actuarial Standards Board. (2011). Incurred health and disability claims (Actuarial Standard of Practice No. 5). Actuarial Standards Board.
Financial Accounting Standards Board. (1975). Accounting for contingencies (Statement of Financial Accounting Standards No. 5). FASB.
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2019). Intermediate accounting (17th ed.). Wiley.
The Purdue Global AC599 Unit 7 instructions
The seventh AC599 unit asks you to summarize your capstone findings for the decision-maker. Put the findings first, each stated as a figure and its consequence, before any description of method. Explain where a finding depends on something outside accounting, such as a contract definition, and give the result under each plausible reading. Identify the cause, not only the symptom. Note what did not change, so the reader does not over-react. Explain why these findings were selected and others left out. Tell the reader what to do next and in what order. Summarize the method briefly with a pointer to the full analysis. Address any reporting question the findings raise, such as a prior-period correction. Write as a memo with a copy line. Cite SFAS 5, ASOP No. 5 and Kieso and colleagues in APA 7.
How this AC599 Unit 7 example is built
The sample's first finding states that $661,300 gross and a $38,000 receivable are supported against $410,000 recorded, with a range excluding the recorded amount. The second explains that $208,200 of the shortfall relates to 2025 and gives coverage of about 1.17 or 1.22 depending on the bank's definitions, quoting the agreement's vague wording. The third traces the cause to an untested rule. The highlighted sentence explains why each finding pairs a figure with a consequence. Sections note the unchanged cash flow, why other observations were left out, what the chief financial officer should do this week, the method in brief and the prior-period evaluation.
AC599 Unit 7 rubric: what earns full points
Findings summaries in AC599 earn points for leading with clear, quantified findings and their consequences. Graders check that figures match the analysis and that findings depending on external definitions are presented under each reading. The rubric rewards identifying causes, stating what did not change and giving the reader an order of action. Selecting the findings that require decisions, and explaining why others were left out, shows judgment. Raising the reporting question the findings create, such as a prior-period correction, demonstrates technical command. Summaries that open with method, bury findings or present a single covenant answer when the definition is unsettled lose credit. A memo heading with a copy line, and APA 7 references, finish it.
AC599 Unit 7 help: mistakes that cost points
Weak Unit 7 summaries retell the analysis instead of stating findings. Figures differ from the analysis draft. Covenant effects are stated as certain when they depend on a definition the bank has not confirmed. The cause is omitted, so the reader cannot prevent recurrence. Nothing tells the reader what to do next. The prior-year portion of an error is ignored. For different findings, we can turn your analysis into findings stated as figures and consequences. Some summaries also omit what did not change, inviting over-reaction.
Get an AC599 Unit 7 example written to your instructions
Share the analysis you completed, who will read the findings and the Unit 7 prompt and rubric. The summary written from it puts each finding first as a figure and a consequence, keeps certainty honest and discloses limitations before a reader has to hunt for them. The first custom sample is free, returned in about 24-48h. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC599 Unit 7 questions, answered
Who should the findings summary be addressed to?
Whoever your prompt names, and if it names nobody, the person who would act on the answer. This sample addresses the distributor's chief financial officer, with the controller copied, because the adjustment and the policy are theirs to approve. Writing for a specific reader shapes every choice, from how much method appears to which terms need defining.
Where can I find a free AC599 Unit 7 sample paper?
This page holds a full AC599 Unit 7 findings summary on Hollis Creek Supply's understated health reserve, with three findings stated as figures and consequences, next steps and APA 7 references.
Why give two covenant ratios?
Because the credit agreement's earnings definition leaves the treatment of prior-year corrections open. Counting the full adjustment gives about 1.17, below the floor; excluding the $208,200 prior-year portion leaves about 1.22.
What should the chief financial officer do first?
Contact the bank's relationship manager with the analysis and ask how the lender wants the prior-year portion treated, while the controller prepares the adjusting entry and the out-of-period evaluation.
Does the adjustment affect cash?
No. The adjustment is an accrual of claims already incurred. Operating cash flow is unchanged, and the stop-loss receivable is a separate asset expected to be collected.