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Accounting News Roundup: U.S. Companies Aren’t Ready for IFRS; Limited Liability Is a Godsend; Out with the Old GM CFO | 03.10.11

IFRS Outlook: Hurry Up and Wait [CFO]
Asked which are the most crucial accounting issues that their companies are facing in 2011, 34% of the 472 CFOs who responded to the question ranked “Convergence to IFRS,” or international financial reporting standards, as number one. Cumulatively, the respondents ranked IFRS convergence higher than any other accounting issue. Yet asked to describe their companies’ “readiness to comply with global accounting standards,” 44.2% said they hadn’t “begun to address convergence,” while 38.8% said they were preparing, “but far from ready.”

Satyam Seeks SEC Approval To Shorten Period of Earnings Restatement [Dow Jones]
Satyam Computer Services Ltd. […] which is recovering from a fraud scandal, is in talks with the U.S. Securities and Exchange Commission to shorten the time frame for which the company would need to restate its earnings under U.S. accounting standards, its chairman said. A restatement of earnings under U.S. accounting standards would be one of the prerequisites for Satyam to be able to relist on the New York Stock Exchange.

Auditors would deflate accounting bubbles [FT]
But it is right for regulators to impose high standards on auditors, who in servicing big quoted companies benefit from what looks suspiciously like an oligopoly. Accountants who habitually let a little air out of inflated asset values could help avert future market crashes. In an old joke, a chief executive asks his slick FD what the profits figure is. “What would you like it to be?” comes the reply. Sceptical auditors would guard against that.

Auditors Abandon Investors On Liability Limits [Forbes]
The Big 4 audit firms have always been preoccupied with significant legal liability in the US. Managing these cases requires exorbitant amounts of the US firms’ time and money. Their international umbrella firms and, in many cases, members firms in other parts of the world are also burdened. It’s my estimate that Big 4 leadership spends 75% of their time on litigation matters.

American Apparel CEO held teen as sex slave: lawsuit [Reuters]
American Apparel Inc founder and chief executive Dov Charney is being sued for $250 million by a woman who said he treated her as a sex slave when she was a teenage sales employee at the clothing chain. Irene Morales of Brooklyn, New York, has accused Charney, 42, of sexual harassment, creating a hostile workplace, gender discrimination and retaliation. American Apparel and directors at the company have also been named as defendants in the lawsuit, filed in a New York state court on Friday. Morales accused them of failing to protect her, and said they knew or should have known that Charney was a “sexual predator.”

Marijuana IPOs Provide Investors With Gateway to Cannabis Boom [Bloomberg]
The legalization of medical marijuana — permitted in at least 15 states — has kicked off a booming economy in ancillary goods. Startups such as Peterson’s GrowOp Technology Ltd. and General Cannabis Inc. (CANA) compare the phenomenon to the California gold rush, when the people making the real money were the ones selling pick axes and shovels. Both companies are planning initial public offerings, part of an effort to remove the stigma from what’s seen as a multibillion-dollar industry.

GM Announces CFO Transition [PR Newswire]
General Motors Vice Chairman and Chief Financial Officer Chris Liddell today announced that he will leave the company April 1, 2011, having completed the largest public offering in history and stabilizing the company’s financial operations. Liddell, 52, joined GM in January, 2010 and led the company’s financial and accounting operations on a global basis. “Chris was a major contributor during a pivotal time in the company’s history,” said Dan Akerson, GM chairman and CEO. “He guided the company’s IPO process and established a good financial foundation for the future.”

Posted in ANR