Solcam Corporation

Tim Wollaeger, Chairman of Solcam Corporation, a provider of medical diagnostic imaging products and services, shut the door to his office to get a few minutes of privacy. He had just wrapped up a call with Philip Duster, an audit partner with Thompson & Thompson (T&T) who was responsible for the Solcam account. Because of a revenue recognition issue just recently brought to his attention, Duster was threatening to cut the company off as a T&T audit client and to inform the SEC of his decision unless Wollaeger took immediate action. After hanging up the phone, the Chairman took a deep breath and then sat at his desk to think through his options.