JPMorgan’s Gains Show the Folly of Accounting Rules [Jonathan Weil/Bloomberg]
Last month when JPMorgan first acknowledged that some of its chief investment office’s derivatives trades had gone haywire, it tried to soften the blow by pointing to a big chunk of freshly realized investment profits that reduced the unit’s overall loss. The trading loss so far for the second quarter was about $2 billion, before taxes, the company said May 10. However, the same office had also realized a $1 billion pretax gain from sales of securities this quarter, which JPMorgan said it hadn’t factored into its previously issued earnings forecasts. The obvious impression JPMorgan left was that it had sold securities and booked gains as a way to mitigate the loss. There’s nothing wrong with that under the accounting rules. The problem is with the rules themselves, which create needless complexity for investors, along with ample opportunities for companies to manipulate the timing and size of their earnings.
Grover Norquist re-educates Hill GOP on tax pledge [Politico]
Roughly 20 members of congress and 75 staffers met in the Ways and Means committee room for a closed door meeting with Norquist, president of Americans for Tax Reform, for what attendees described as an “educational meeting about the pledge.” Norquist’s arrival on the Hill comes as a small but increasingly vocal group of Republicans have started to openly hedge on their commitment to the pledge, saying it’s a hinderance from truly reforming the tax code.
PwC Boston Employees are Out of the Office [PwC]
Technically they're volunteering, so look for 1,600 CHOWDAheads in Papa Whiskey Charlie t-shirts all over the city.
Cleghorn says he didn’t know about questionable Nortel accounting practices [Globe and Mail]
Former Nortel Networks Corp. audit committee chairman John Cleghorn said he did not know Nortel senior staff had prepared an internal outlook in March, 2003, showing how they could earn payouts on their bonuses by the end of June that year. Mr. Cleghorn, the former chief executive officer of Royal Bank of Canada who joined Nortel’s board in 2001, testified Thursday at the Toronto fraud trial of three former Nortel executives, explaining he did not learn about a number of accounting decisions made by management during a controversial period in 2003 until the board’s independent investigators told them about the events in 2004.
I may have been "a bit naïve", admits Hoogervorst [Accountancy Age]
The head of accounting standards setter the IASB has admitted that he may have been "a bit naïve" in his expectations of accounting before taking the job.
House Democrats push bonus depreciation bill [The Hill]
A group of House Democrats is calling for quick passage of a bill that would extend 100 percent expensing through this year. The lawmakers, mostly hailing from the House Ways and Means Committee, are urging their Republican colleagues to take up the bonus depreciation measure on its own, outside of a package of tax extenders under consideration by the panel. In the past, the measure has been extremely popular among lawmakers as a way to encourage businesses to invest in equipment and, eventually, pick up their pace of hiring.
Patricia Maione Blames GPS After Driving Car Onto Massachusetts Golf Course Sand Trap [AP]
A woman told police she drove her car into a sand trap on a Massachusetts golf course because her GPS sent her the wrong way. Police say she was drunk. Patricia Maione was held on $10,000 bail after pleading not guilty Tuesday to charges including driving with a suspended license and fourth offense drunken driving. Authorities say the 47-year-old woman's car got stuck at the Whitinsville Golf Club in Northbridge on Monday. She told police her GPS told her to turn left, which she said led her through a corn field and onto the golf course. There were golfers on the course at the time, but no one was hurt.