Please ensure Javascript is enabled for purposes of website accessibility

Accounting News Roundup: Kroeker Leaving SEC in July; Mad Men and Tax Policy; PwC Questions Disclosures Under Fair Value | 06.21.12

SEC says chief accountant leaving in July [Reuters]
James Kroeker, the U.S. Securities and Exchange Commission's chief accountant since 2009, is leaving the agency in July to re-enter the private sector, the SEC said on Wednesday. Kroeker has been a key figure in the SEC's upcoming decision on whether to move U.S. companies to international accounting standards. He has been guiding a staff report due out soon that will help SEC commissioners decide whether to switch to international standards.

The World's Most Powerful Accountant Steps Down [Jon Weil/Bloomberg]
JW got Lynn Turner's thoughts on what to expect re: IFRS: "It will likely be some period of time before a new chief accountant is appointed," [Turner] said. "And I would not expect the SEC to adopt IFRS prior to that person being in place. You've got five commissioners, none of which have an accounting background whatsoever. It would be highly unusual that they would adopt a rule without having their chief policy adviser on such matters in place."

China bean-counters should open their books [Reuters]
At worst, the SEC could strip the auditors of their ability to sign off accounts for companies listed in the United States. That would affect not just Chinese companies but also multinationals which rely on Chinese joint ventures to vet their local divisions. Those Chinese companies unable to find a U.S.-approved auditor – there are $66 billion worth of Chinese company shares listed on Nasdaq alone, according to Reuters data – may have to delist. For China, that might seem a small price to pay for defending the country from foreign snooping. Intervention of any kind is unwelcome. It has taken the U.S. accounting regulator years just to get a vague agreement that it can sit in on Chinese audit inspections. Chinese authorities may even consider U.S. delistings as a boost for domestic markets: a Shanghai exchange official has said Chinese companies are welcome to return home.

Of ‘Mad Men,’ Obama and taxes [Politico]
Grover Norquist works in some pop culture to his tax policy arguments.

Bowles Says Romney Plan Would Require Ending Tax Breaks [Bloomberg
Republican presidential candidate Mitt Romney’s plan to reduce tax rates would need to be financed by ending widely used benefits such as the mortgage interest deduction, said Erskine Bowles, who was co-chairman of President Barack Obama’s deficit-reduction commission. Romney is “partly right and partly wrong” when he says he can cut tax rates by 20 percent and make up the money by curtailing tax breaks, Bowles said on Bloomberg Television’s “Conversations with Judy Woodruff,” airing this weekend. “One area that Governor Romney is wrong is you can’t just affect the top 15 percent” of Americans, said Bowles, whose bipartisan plan would cut spending and raise taxes. “It’s just not enough money there in getting rid of the tax expenditures that only affect the upper-income people. You’re going to have to affect people down through the brackets.”

PwC Calls Out Puzzling Disclosures Under New Fair Value Rules [CW]
The analysis said companies were not always clear in their disclosures about what was excluded from the quantitative tables of significant unobservable inputs for assets and liabilities measured at Level 3 of the fair value hierarchy, which relies solely on judgment and unobservable inputs. The firm also said it found inconsistency in the inclusion of ranges and weighted averages of significant unobservable inputs. PwC was especially troubled that it appeared some preparers applied a limited exception permitted for information provided by third-party pricing services despite the fact that it appeared those preparers had the relevant data from their pricing services. The SEC and the Public Company Accounting Oversight Board have made it clear they expect management to take responsibility for its fair value measurements even when they rely heavily on third-party pricing services for the critical data. It's possible, PwC surmises, that companies left out information they obtained late in the close and reporting process, giving them insufficient time to validate it and apply appropriate controls before including it in a footnote disclosure.

America’s long slope down [DCJ/Reuters]
Tax pontiff David Cay Johnston: "My reading of this and tons more data is that the Bush tax cuts utterly failed, the Fed’s artificially low-interest rate policies under presidents Bush and Obama do far more damage than good (especially to savers), and that the United States is harmed both by the imbalance in the trade relationship with China and scores of trade agreements with South Korea and other low-wage countries that are deeply flawed at best. We need to recognize that the tax cutters were snake oil salesmen, the Federal Reserve an enabler of damaging debts and that bilateral trade deals are written of, by and for global financiers, not workers."

Woman left kids in car after wreck, later found naked [C2H]
KPMG employees are now properly equipped to act similarly: "A woman was found naked and eating ice cream inside a drug store after leaving three children alone in a car after a wreck, investigators said."