Accounting News Roundup: DVA Relief; Fraudulent Invoices; One Hour of Work for Yourself | 01.06.16

Banks Get Relief on Accounting Headache [WSJ]
The FASB must've heard the bellyaching in the Wall Street Journal about debt valuation adjustments because they've managed to change their treatment.

Tuesday’s move by the Financial Accounting Standards Board will strip those sorts of gains or losses out of the banks’ net income. Instead, those gains and losses will land in “other comprehensive income,” a separately reported basket of earnings that includes a variety of items that don’t stem from a bank’s operations, such as foreign-currency adjustments and changes in the value of pension assets.

In a statement, FASB Chairman Russell G. Golden said the move would help “to better meet the requirements of today’s complex economic environment.”

Robert Willens, an accounting and tax expert who heads his own firm, Robert Willens LLC, said the change “makes perfect sense.”

Yeah, it probaly does. In one example given, Morgan Stanley reported a $2.1 billion gain in Q3 2011 only to have a $1 billion loss a year later. Everyone hated this including JP Morgan's Jamie Dimon who called it "one of the more ridiculous concepts that’s ever been invented in accounting" and some other guy who says, "People are happy to think of the earnings excluding DVA as the 'real' number." 

Ex-McKinsey partner arrested for fraudulent invoices, expenses [Reuters]
Navdeep Arora allegedly conspired with a State Farm consultant, Matthew Stafford, to "submit fraudulent invoices and expenses" to McKinsey in excess of $890,000.

The indictment said that beginning in 2004, Arora fraudulently charged McKinsey and State Farm for expenses in order to reward Sorensen and an unnamed co-schemer for helping McKinsey get State Farm consulting work.

Fraudulent invoices to McKinsey, State Farm and another McKinsey client for unperformed work resulted in $490,975 in fees being paid, the bulk of which Sorensen retained, the indictment said.

Arora also submitted fraudulent expenses to McKinsey, State Farm and other clients for domestic and international trips for himself, Sorensen and others to cities including Miami, Las Vegas, New York, Prague and London, the indictment said.

In total, Arora obtained $400,000 in fraudulent expenses, which also covered personal hotel, meal and theater tickets in Chicago that he claimed were business expenses, the indictment said.

The report says that McKinsey fired Arora when they figured things out in 2011. He then joined KPMG in 2014, so maybe someone over there should start pulling his expense reports.

Set Aside One Hour Each Day to Work For Yourself [Lifehacker]
Adding to Leona's suggestions from yesterday is this excellent advice: " If you’re not happy with your situation, give yourself one hour a day where the only boss you have is you." That doesn't necessarily mean you have a side gig that earns you actual money, but you can develop a skill or some other self-development that are for your goals, not your employer's. 

In other news:

 

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