The Accountant Shortage is a Material Weakness Now
Ed. note: on July 13 we contacted AAP media relations to request salary ranges for accounting positions referenced in the below 10-Q disclosure. We don’t expect a response but if we get one, we’ll update. The Wall Street Journal wrote today about recent disclosures made by Advance Auto Parts, Joby Aviation, and Germany’s Evotec that specifically point […]
New SOX In the U.K.? It’s (Probably) Coming Soon
The February gloom was broken recently by the news that the British government will be introducing reforms targeting company financial reporting and audit oversight. In truth, none of this should be a surprise. There have been several accounting scandals in recent years where the directors of various companies have been unscrupulous and their external auditors […]
Learn How COVID-19 Is Impacting Q2 Financial Disclosures—For Free!
In yesterday’s Accounting News Roundup e-newsletter, you might have noticed an ad for a free webinar on June 23, “Be Ready: Q2 Disclosures in Light of COVID.” (If you do not subscribe to ANR, you can do so here, thx.) Because the COVID-19 pandemic is affecting pretty much everything in life—yes, even public company financial […]
FASB’s CECL Standard Is a Disaster Waiting to Happen
“A simple accounting standard is going to decimate the people in my district’s ability to have home mortgages. This has got to stop. This can’t continue. You should stop and look at the damage you’re going to be doing to the citizens of this country. And in essence after that happens, it’s going to devastate […]
Guy Who Cares Way More About Governmental Accounting Than You Do Is Next GASB Chair
Joel Black, partner in charge of the audit practice at Atlanta-based Mauldin & Jenkins, will be the next chair of the GASB, and he eats, sleeps, and breathes governmental accounting. “I am very excited to take on this new professional challenge,” said Mr. Black. “I have been immersed my entire adult life in the important, […]
FAF Did Not Pick You to Be FASB’s Next Chairman
Unless your name is Richard Jones and you’re chief accountant and partner at EY, then the Financial Accounting Foundation did pick you, congratulations. Jones will succeed nice neighborhood dad Russell Golden as FASB chairman after Golden’s term ends on June 30. Golden, a former Deloitte partner, has sat in FASB’s big chair since July 1, […]
Sorry, Lease Accounting Rules Don’t Care That You’re Trying to Keep Patients Alive
The Wall Street Journal recently checked in with the CFO of Genesis Healthcare to see how the transition to the new lease accounting standard is going. Not good, apparently: Genesis Healthcare Inc., a Kennett Square, Pa.-based post-acute health-care provider, for instance, had to chase down hundreds of small equipment leases, finance chief Tom DiVittorio said. Mr. DiVittorio […]
Leslie Seidman Wants Everyone to Know That GE’s Financials Are A-OK
Remember Leslie Seidman, the former chairman of the FASB? Well, she is now, among other things, a member of General Electric’s board of directors and chairman of its audit committee. She made an appearance on CNBC on Aug. 15 to comment on the report from Madoff whistleblower and forensic accountant Harry Markopolos that accuses GE […]
Exposure Drafts: Urologists Also Issue Going Concern Disclosures
Exposure Drafts appears every other Wednesday. Send your accounting cartoon ideas to [email protected]. You can follow Greg Kyte on Twitter.
New Year’s Eve Was Kind of a Bummer for Hertz
Man, I hope executives at Hertz got shitfaced on New Year’s Eve, because being told the company has to pay a $16 million civil penalty to the Securities and Exchange Commission to settle a case involving numerous accounting violations is not a stellar way to end 2018/begin 2019. An SEC cease-and-desist order filed on Dec. […]
Sorry, Public Companies, the FASB Isn’t Giving You Any More Time to Get Your Shit Together on Lease Accounting
The chairman of the Financial Accounting Standards Board crushed any hopes public companies might have that the FASB would delay the Jan. 1, 2019, start date for its new lease accounting standard. At #AICPA conference, FASB Chairman Russ Golden is asked: Considering system challenges, new guidance, auditor concerns about #internalcontrols, will #FASB delay #leases standard? […]
Simplifying Accounting Standards Still Complicated
Too bad accounting standard simplification doesn’t follow the same rules as Marie Kondo’s The Life-Changing Magic of Tidying Up. Eliminating the available for sale security classification doesn’t exactly spark the joy. Every time the FASB drops a new Accounting Standard Update (ASU), it leaves you feeling weary. Maybe all the U.S. GAAP decluttering and other […]
COSO’s ERM Framework Has Fresh Paint, New Open Concept
I remember in college, I’d turn in a paper and feel a sense of relief knowing that I never had to look at it again. Feedback from the instructor was informative but required no further action. Man, do I miss that. Don’t you? I’m sure PwC, who authored the COSO Enterprise Risk Management (ERM) Framework, […]
SEC Fines Company for Failing to Mention That They Paid for CEO’s Lavish Perks (and Some Non-GAAP Stuff, Too)
Normally I'd reserve mis-adventures in non-GAAP accounting for the news roundup, but it's not every day that an SEC order includes this: MDCA is New York-based marketing company MDC Partners and gosh, how do you fail to disclose the cosmetic surgery? Everything else is pretty standard fare as far as extravagant perks go, but if […]
FASB Might Take a Breather on Standard Setting After Some People Yelled at Them
I'm sure working at the FASB is harder than I imagine it to be. What I imagine it to be is a bunch of people who like to read about accounting reading a lot about accounting. Then every once in awhile a few people get together to kick around crazy ideas about how to make […]
Weatherford International Gets in Trouble for Letting Execs Choose Their Own Numbers
Going Concern history buffs will recall a period in 2011-2012 when oil services company Weatherford International had some chronic problems with its tax accounting. Manipulations by two of its former accounting executives — James Hudgins and Daryl Kitay — resulted in a $500 million restatement in 2011. This was followed by two more restatements in […]
New SEC Rules Have Made GAAP Great Again (in Press Releases Anyway)
For some time now, I've been featuring various worries by various people about non-GAAP reporting in the morning roundup. You see, lots of people think that GAAP = Good and non-GAAP = Bad because non-GAAP reporting often presents a rosier picture of a company's financial performance. This made non-GAAP reporting immensely popular among public companies […]
When It Come to Overcomplication, Accountants Take the Cake
According to Richard Thaler, “If you want to encourage someone to do something, make it easy.” Man, did accountants miss that memo. We really can’t deny it… it comes across in our nitpicky GAAP rules. More billable work for us, I guess, but, there has to be a better way. At least the FASB was […]
Simplifying Financial Reporting Is Hard
As a concept, business is simple. Someone willing to buy a thing or a service gives you money for that thing or service. If you sell lots of things or services then you’ve really got something good going. Hooray! You’re an entrepreneur.
This 8-K From Valeant Is Something to Behold
This morning, troubled drug company Valeant announced a restatement and that its CEO Michael Pearson would be stepping down. This all started, you may remember, last fall when reports from the Southern Investigative Reporting Foundation and Citron Research published reports questioning Valeant's relationships with pharmacies, accounting, etc. etc. and it culminates with this. Oh, who […]
That Time One of Donald Trump’s Companies Got in Trouble for Reporting Ludicrously Deceptive Non-GAAP Results
Cretinous cheese puff and future American emperor Donald Trump likes to remind people of his long run as a very smart, very successful, very smart and very successful — probably the greatest ever, if he's being honest about it — businessman. There are too many stories to go around about all his WINNING, so to […]
FLASH: Sales, Accounting Personnel Face Pressure to Meet Revenue Goals
Marvell Technology Group's audit committee launched an investigation into the company's revenue recognition policies last September. They didn't find any funny business but did learn that “internal controls were not fully followed,” “revenue was recognized prematurely for some transactions,” and the real bombshell: The committee also said there was "significant pressure" on sales and finance […]
FASB Flabbergasted That People Get Worked Up About Materiality’s Definition
I don't quite remember when I first learned about the concept of materiality, but my hunch is that it was in the first accounting class I ever took, which was in high school. That suggests, to me anyway, that the concept of materiality is elementary to accounting. That is, you know a debit from a […]
Overstock.com Stockpiling Gold Just in Case
In case you've been pining for some Overstock.com coverage (oh, just admit it!), here's an update we've deemed worthy: On Overstock's last quarterly report to the Securities and Exchange Commission, the company listed $10.9 million in "precious metals" among its assets — $6.3 million in gold and $4.6 million in silver. The coins are stored […]
IBM: We Mind the GAAP
IBM disclosed an investigation into its revenue recognition today but isn't worried too about it: In a statement on the investigation, IBM defended its accounting practices as “rigorous and disciplined,” adding that it is “confident that the results and information we report have been appropriate and consistent with GAAP,” or Generally Accepted Accounting Principles. The […]
Company Accused of Being ‘Pharmaceutical Enron’ Doesn’t Appreciate the Sentiment
When people ask, "Is so-and-so the next Enron?" they usually don't make a strong case that "so-and-so" is much like Enron. Rather, "It's involves some accounting mumbo jumbo, so let's call it Enron." Which brings us to Valeant Pharmaceuticals, who hasn't had a good day. A report from Citron Research claims that the company is […]
This Blog Combining Accounting Standards and the Work of H.P. Lovecraft Is the Greatest
Although I'm woefully unfamiliar with H.P. Lovecraft's work, I am aware of his reputation as a master of horror literature and prose as well as his disturbing creation, Cthulhu. All of this is irrelevant other than to introduce you to another masterpiece, Dark Accounting, "A collection of Lovecraftian accounting standards which are entirely computer generated." […]
Only 20% of Companies Using Creative Accounting to Its Full Potential
Here's a study (via Broc Romanek) that surveyed 400 CFOs on the misrepresentation of earnings. It's remarkably unremarkable on a number of points, including that CFOs say the two biggest drivers of earnings manipulation are 1) to influence a company's stock price and 2) pressure to hit earnings targets. But also, you'll be floored to […]
IASB Can Take a Hint, Will Delay New Revenue Recognition Rules
After releasing its proposal to delay its revenue recognition rule back in April, the IASB received 100 comment letters and "virtually all" of them supported the idea. Today, they went ahead and pushed it back to 2018. Hope everyone's happy. [WSJ]
SOX Approaching Teens, Behaving Accordingly: Survey
That is, taking up a lot more of companies' time and money: Nearly 13 years after the passage of the Sarbanes-Oxley Act, the money and time spent to comply with its disclosure requirements continue to increase for companies, according to a new survey. Sixty-seven percent of the 460 audit executives and professionals polled by the […]
Hertz’s Accounting Errors Get Worse, Could Get Worser
Crappy car rental company Hertz's accounting problems are worse than they thought. The total errors found are up to $183 million, an additional $30 million more than previously reported. On top of that, the company says it's, "still reviewing the figures," that more changes are NOT out of the question, and those "changes may be significant." […]
Who Puts “USGAAP” on Their License Plate?
It's nice to see a little national accounting pride, I guess: A few suspects: Christopher Cox Someone from the CPA Congressional Caucus who has a boat parked in RI. Your average Joe who's just walking down the street minding his own business. Anyone at the SEC, really. If spotted, flag him or her down and get […]
Toshiba Restating, Concedes That Restatement Could Be Restated
A "special task force" assigned by Toshiba Corp to look into accounting irregularities found that the company underestimated the costs of three infrastructure projects by ¥50 billion ($419 million). The company also said that "the review was continuing and the ¥50 billion figure could be revised later," allowing for the possibility that this could reach VA […]
AICPA Would Like FASB, PCC to Keep Their Heads Up, Get Back to Work
AICPA President, CEO and former Mr. Universe Barry Melancon, CPA, CGMA wrote a letter to the Financial Accounting Foundation recently to provide feedback on the FAF's review of the Private Company Council. This in and of itself, is not all that interesting, although you get the distinct impression that AICPA relishes in the opportunity to […]
SOX 404 Not Helping: Study
A recent study by Sarah Rice of Texas A&M and David Weber and Biyu Wu of the University of Connecticut has found that everyone's favorite section of the Sarbanes-Oxley Act of 2002 is falling short on expectations: The study, which appears in in the new issue of the American Accounting Association’s journal The Accounting Review, found […]
Debt Issuance Cost Presentation Sure Doesn’t Seem Any Simpler
I like this Tom Selling post about the FASB's simplification of presenting debt issuances costs. I like it mainly because he picks apart the FASB's idea of what constitutes "simplification" as well as the Board's rationale for their decisions to the point where you have a hard time believing that the FASB actually issued this […]
Triple Entry Accounting: Harebrained or Genius?
I've never been to SXSW, but I imagine that all the smart people talking about smart ideas and getting all smart with each other is nauseating. Still! If I had been in Austin yesterday, I probably would've enjoyed this Bitcoin presentation that included a heavy dose of accounting history from Jake Benson, founder of LibraTax: […]
Belated #TBT: The Birth of the Cash Flow Statement
No financial statement tells the story of a company quite like the statement of cash flows. It's simple, yet powerful, like The Sun Also Rises or "The Contest" or Where's Spot? Everyone can enjoy it. But where did this thing of beauty originate? Did the balance sheet and income statement party too hard one night only […]
American Realty Capital: Nothing to See Here Except Some Weak Internal Controls
American Realty Capital Properites reported the results of its internal investigation into accounting irregularities and SURPRISE, it's just some weak controls. Interim ARCP CEO William Stanley is quoted, "Importantly, the investigation did not identify any material changes relating to our real estate ownership, the validity of our leases or our fundamental business operations." So we're good […]
Hertz Can’t Promise That Its Accounting Troubles Won’t Get Worse
UPDATE: I relied on that figure provided by The Journal that incorrectly stated that the cost of the accounting error was $180 million. The correction states it hit profits by $153 million. Sorry for the error. Hertz, a car-rental company once endorsed by O.J. Simpson, disclosed that its shoddy accounting have cost the company $180 $153 […]
FASB Vows to Hit the Gym, Stop Smoking, and Stick to Other Resolutions in 2015
Alright so I lied, FASB isn't going to quit smoking. What they are doing, however, is laying out their goals for 2015 for all of us to see. Chairman Russ Golden writes: I’d like to share with you how we plan to “get it done” in 2015—how we’ll build upon the successes of 2014 while […]
10 Gifs That CFOs Should Use in Their SEC Filings
And now, for a little bit of stupid fun. Compliance Week has a post on the SEC's clarification of what constitutes proper multimedia and graphics in company filings. In this Compliance and Disclosure Interpretation from the Division of Corporation Finance, no joke, the following exchange is presented: Question: May a Commission filing contain graphics (such […]
#TBT: Convergence of International Accounting Standards Before Convergence Was Cool*
If you are one of the lucky few who has taken the CPA exam since IFRS was added into the mix, you may be surprised to know we've actually been at this whole convergence thing for some time. Except it wasn't always called convergence. Says FASB: The 1960s—Calls for International Standards and Some Early StepsInterest […]
SEC Chief Accountant Suggests a Mysterious Plan D for IFRS
In remarks to the U.S. Chamber of Commerce on Wednesday, SEC Chief Accountant Jim Schnurr floated a fourth, mysterious alternative to use of IFRS in the U.S. FEI reports: Schnurr described three possible alternative actions with respect to the use of IFRS by U.S. public companies that have been considered in that past: “Turning the […]
#TBT: Former SEC Chairman Christopher Cox on The SEC’s IFRS Roadmap
The great thing about speeches these days is that they generally live in perpetuity on the Internet, even if the speech-makers would hope that we have forgotten them. Oh, you wish. Today's Throwback Thursday comes from deep in former SEC Chairman Christopher Cox's closet. Made in March of 2007, over a year before the SEC […]
Just What the Hell is Goodwill Anyway?
The problem of what to do with goodwill starts with a rather basic point: the answer to the question “What is goodwill?” appears to be “Nobody knows”. The UK’s old standard, FRS 10, said that goodwill is “neither an asset like other assets nor an immediate loss in value”. Later, the basis for conclusions of […]
The Possibility Remains the FASB Could Turn Their Simplification Initiative Into a Giant Charlie Foxtrot
Accounting rules are complex. It is known. The Financial Accounting Standards Board, in an effort to serve its stakeholders, has made it a priority to make them a little less awful. This is no small feat and Russ Golden, FASB Chairman, is looking for tap-ins: “Complexity in accounting can be costly to both investors and […]
Former SEC Chair Chris Cox Goes From Cheerleading IFRS Adoption to Burying It
Before we talk about Chris Cox's recent comments on adoption of international standards in the U.S., allow us to look back. After all, you will recall Cox was the one pushing for them years ago when he was still chairman of the SEC. Let's see what he said at an SEC Open Meeting in August […]
Five Things You Need to Know About New Revenue Recognition Rules
Knowing us, you can guess where we're going with this. We're not writing a how-to guide on the new revenue recognition rules, which brings us straight to our first thing you need to know: there are folks in the know available to walk you through it. #1: A transition resource group is here to help […]
Fannie Mae Confident That a $4 Billion Accounting Error Is Totally Not Material, Guys
The Street had an interesting piece about Fannie Mae's most recent "out-of-period adjustments," which is Fannie's casual way of explaining away a $4 billion error over five consecutive quarters from Q4 2011 through Q4 2012, as well as Q2 2010. While Fannie Mae did disclose the errors, one reason they did not attract more scrutiny […]
“Is the CFO’s quitting time after 3 pm?” Coming to an Auditor’s Questionnaire Near You
“If the managers, the C-level and board have good demonstrative behavior, everybody down the line will mimic that,” said Yigal Rechtman, senior manager of forensics and litigation at Grassi & Co., an accounting and business consulting service, at a New York State Society of CPAs’ forensic accounting conference yesterday. “People need to operate by example,” […]
Ace CEO Not Sure What This Mental Masturbation Around Insurance Accounting Is All About
Ace Ltd. (ACE) Chief Executive Officer Evan Greenberg said the push for new U.S. accounting standards may distract investors from the most useful metrics in gauging insurers’ financial status. “I don’t know whose benefit you’re ultimately serving except a bunch of academics,” Greenberg said today on a conference call. The Financial Accounting Standards Board proposed in June […]
Here’s What a Hedge Fund Profit-And-Loss Statement DOESN’T Look Like
Oh Hamilton Nolan… you'd be wise to avoid writing about things you just don't understand. Case in point, this alleged hedge fund "P&L statement" he came up with that is less P&L and more some internal spreadsheet that likely got spit out by the fund's accounting software, if it's real at all: Hedge funds are […]
Public Companies Filing Restatements Totally Aware That Many People Blow Friday Off
Audit Analytics has a great post today about Friday filing dumps, something that Footnoted has been calling attention to for years. Any time a company has to disclose bad news, the theory goes, they will most likely file it late in the day on Friday to soften the effect of an auditor resignation/restatement/announcement of massive […]
Study: Once You Get Past the Accounting Fraud, Chinese Reverse Merger Companies Are Great
A paper presented in August at the annual meeting of the American Accounting Association in Anaheim, Calif., found that “the current Sino-phobic reaction to Chinese reverse mergers may be overblown.” In an effort to assess the performance of these often maligned companies, the study concluded that “as an asset class, Chinese reverse-merger firms (CRMs) have performed […]
A Few Curious Folks Wonder Out Loud if Government Accounting is Constitutional
I remember my very first installment of government accounting as it is taught in FAR like it was yesterday. Cranky from a 5am wakeup and not necessarily looking forward to spending an entire day stuck in CPA review class for work, I usually tuned out my overly-caffeinated boss ripping bad jokes and scribbling T accounts […]
Audit Committees Have More Issues Than a Magazine Stand
Our friends at Audit Analytics have all the fun info: 445 companies have reported #DisclosureControl issues with their Board, Audit Committee, or Corporate Governance thus far in 2013. #SOX302 — Audit Analytics (@AuditAnalytics) September 9, 2013 (cont.) Of those 445 companies, 401 determined that the Audit Committee, Board, or Corp. Gov. issue led to ineffective […]
Not Choosing FRF for SMEs Will Be Even Easier Thanks to the AICPA’s New Decision Tool
Are you a prudent business person staring at his/her five-line balance sheet thinking, "As a prudent business person whose financial reporting isn't bound by generally accepted accounting principles and doesn't engage in transactions that require highly-specialized accounting guidance, I'm interested in some simpler accounting framework options. I've gone through the PCC's Private Company Decision-Making Framework but I really like to […]
‘Little GAAP’ vs. Financial Reporting Framework: As a CPA, People Expect You to Know This Crap
Welcome to the latest edition of Accumulated Deprecation, Greg Kyte's monthly column. Go here to read more of Greg's posts.
Stockton, California’s Lousy Accounting, Incompetence Made Up for Its Lack of Corruption
"Stockton is not Bell — we found no evidence that corruption and self-dealing drove this city into insolvency," [state Controller John] Chiang said in a statement, referring to the Los Angeles suburb whose municipal leaders looted millions of dollars from its treasury. "Instead," Chiang wrote, "many of Stockton's problems can be tracked to poor decision-making that was […]
NASBA, AICPA Agree to Hug It Out Over Private Accounting Standards
After a month of some public and private sniping, NASBA and AICPA seem to be burying the hatchet and have issued a joint press release promising to work together: The AICPA and NASBA are committed to engaging in an effort to ensure that the FRF for SMEs, as a non-authoritative framework, is not confused with […]
JOBS Act Hasn’t Encouraged as Many Companies to Avoid Sarbanes-Oxley as Some Would Have Hoped
Before the House of Representatives got down with some Audit Integrity whatever whatever, we had the Jumpstarting Our Business Startups Act as an example of Congressional wading into the accounting/auditing regulatory waters. If you need a refresher, the JOBS Act flew through Congress and the got the President's signature last year despite a lot of people saying […]
NASBA Happy to See Some Legit Options for Private Company Accounting Get Proposed
I intended to get to this yesterday but I was having too much fun rummaging through SEC DCF letters and the day ran out on me. Anyway, NASBA issued a press release to congratulate the Private Company Council for its three proposals for GAAP Lite and they can managed to contain themselves — this time — from telling […]
NASBA Stands Behind FASB’s Private GAAP, Can’t Believe the AICPA’s Chutzpah
On Tuesday we discussed the AICPA's effort to offer a new OCBOA for small businesses, making special note of the Financial Accounting Foundation's slightly irritated response. While the FAF was fine with Melancon & Co. issuing the new Financial Reporting Framework (FRF) for SMEs, they wanted to remind everyone that FRF was most certainly not […]
Companies Wanting More Liabilities on Their Balance Sheets Will Love the New Lease Accounting Proposal
What's that you say, Hans? No one wants more liabilities on their balance sheet? "Obviously, this standard is not a very popular one," IASB chief Hans Hoogervorst said in a conference call. "Generally, companies like off-balance-sheet financing" and the standard will put an end to a major part of it, he said. Well, that's […]
You Know the Convergence of Loan Loss Accounting Is in Sorry Shape When Banks Are a Voice of Reason
Right now, the FASB and IASB are nowhere near agreeing on how loan loss accounting should be done and fifteen (!!!) banks including Bank of America, JPMorgan, Citigroup, Morgan Stanley, and Wells Fargo would like the rulemaking bods to get their act together: While we acknowledge the difficulty inherent in reconciling disparate points of view, we […]
Tesla Is Damn Serious About Revenue Recognition
Considering the lengths that some companies go to manipulate massage their revenue, this passage from Tesla's Shareholder letter is rather refreshing: During Q1, we consistently produced 400 or more Model S vehicles per week, for a total of over 5,000 during the quarter. We recognized 4,900 vehicles as revenue, exceeding our initial Q1 guidance of 4,500, […]
It’ll Be Nothing Short of a Miracle for Meaningful Lease Accounting Reform to Become Reality
Since FASB Statement No. 13 was issued in the mid-70s, businesses have managed to develop a lot of creative ways for classifying some of their future obligations as operating leases, thus keeping those debts off their balance sheets. That's handy for all kinds of reasons, but some people think that it's a very bad thing. Solution? […]
God Only Knows Why Most Companies Still Manually Reconcile General Ledger Accounts
A recent report released by Robert Half and the Financial Executives Research Foundation found that "nearly two-thirds of finance departments in US companies and one-half in Canadian companies" are manually still reconciling general ledger accounts. That seems like a lot! But Roberto Halfo says it's biz as ushe: "The level of manual reconciliation reported in our survey […]
Nice Neighborhood Dad Named New FASB Chairman
Russell Golden will be your new FASB Chairman effective July 1st. He's been at the Board since 2004, after being a partner in Deloitte's National Office Accounting Services department. Since joining the FASB, he's held various technical positions and even chaired the Emerging Issues Task Force for a time. He has all the chops that you'd want […]
At Best, FASB’s Credit Loss Proposal Could Result in Earnings Management; At Worst, FASB’s Credit Loss Proposal Could Result in Lots of Earnings Management
The idea behind the FASB's credit loss proposal is that it would require banks to report the future losses they expect to incur on their loan portfolios. If you think that would require a lot of judgment — or maybe a Magic 8 Ball — you'd be right! The FASB proposal would allow banks to use their […]
Maybe We Should Just Let the Banks Write Their Own Loan Loss Accounting Rules
Banks really appreciate the effort to move away from the recognition of losses as they occur approach, FASB, but: The American Bankers Association has published a “frequently asked questions” document reacting to FASB's approach. The group sees FASB's proposal as an improvement over the existing requirement, but still has concerns. “While the incurred loss […]
IFRS Foundation’s Cool Club Doesn’t Require Support of IFRS, Rather Something That Would Closely Resemble IFRS
Back in November, the IASB threw out this Accounting Standards Advisory Forum idea that would allow a dozen national rulemaking bodies to get together and talk fancy about debits and credits. An accounting cool club, if you will. There was one small catch — anyone in the club had to sign on as supporters of […]
“Adjusted EBITDA (As Adjusted)” Is Our New Favorite Non-GAAP Measure Being Used By a Real-life Company
Today in creative accounting news, Jonathan Weil has the absurd notion that some company would use a profitability metric with a lot of convenient adjustments to achieve a desired earnings outcome. And then try to rationalize it to analysts and investors in a press release. I'm floored. The company in question is Black Box Corp. "a […]
FASB Still Applying Duct Tape to Repurchase Accounting
Apparently Accounting Standards Update No. 2011-03 didn't quite hold things together as well as people would have hoped: FASB's newest proposal is meant to address more recent concerns that current accounting requirements do not yet appropriately reflect a entity's obligations and risks resulting from repurchase agreements, said FASB Chairman Leslie Seidman in a prepared statement. […]
Study: Rules-based Accounting Shields Firms From Lawsuits
According to groundbreaking research by Richard Mergenthaler, assistant professor of accounting at the University of Iowa Tippie College of Business, shareholders are more likely to sue firms that use principles-based accounting standards over rules-based standards. The short: Some claim that rules-based accounting standards shield firms from litigation, while others argue that violations of detailed rules […]
Ex-Nortel CFO Rendered Speechless After Accounting Fraud Acquittal
An Ontario judged dismissed a case against three former Nortel Networks Corp. executives who were charged with accounting fraud at what was once North America’s largest telephone-equipment maker before its collapse in 2009. Judge Frank Marrocco said the burden of proof was not met in fraud charges against former Chief Executive Officer Frank Dunn, former Chief […]
BOOYAH! SEC Goes After TheStreet for Multiple Accounting Infractions
Hmm, wonder if Jim Cramer will mention this on his show tonight? The Securities and Exchange Commission today charged a digital financial media company and three executives for their roles in an accounting fraud that artificially inflated company revenues and misstated operating income to investors. According to the SEC, TheStreet Inc. filed false financial reports […]
ICYMI: Here Are Some Accounting Execs Talking About How Useless XBRL Is
The mandatory use of eXtensible Business Reporting Language by large public companies began in 2009 and was extended to smaller filers in 2011. And while it has made searching for SEC filings a breeze, it was the sincere hope of the SEC that XBRL would also be a serviceable tool for companies to do similarly […]
COSO Willing to Accommodate Anyone Who Hasn’t Been Able to Get the Hang of Things the Past Two Decades
Auditors and companies looking to adhere to a proposed internal control framework for financial reporting were told yesterday at a Baruch College auditing conference not to sweat the actual implementation date when the draft framework is finalized in March 2013. Comparing the new framework from the Committee of Sponsoring Organizations of the Treadway Commission (COSO) to […]
Mike Lynch Would Like HP to Show Their Work
Last week, when HP announced that $5 billion of its $8.8 billion write-down was due to "serious accounting improprieties, misrepresentation and disclosure failures" at Autonomy, a lot of people were asking questions. How do the numbers work? Is HP taking a bath? Who's this Brand X accounting firm that Meg Whitman doesn't think too highly […]
This HP/Autonomy “Accounting Improprieties” Thing Hit the Big 4 Superfecta and Other Things We Learned Today
As luck would have it, we don't get to coast this Thanksgiving week as HP had to come along and screw it all up by announcing a $8.8 billion write-down, $5 billion of which is described as "serious accounting improprieties, misrepresentation and disclosure failures" at software company Autonomy, who HP acquired back in 2011. And where […]
ICYMI: Zynga’s Finance Department Is Experiencing a Quasi-Exodus
Last week was not a good one for the imaginary farm/mafia/faux-Scrabble™ merchants at Zynga. After their much ballyhooed CFO Dave Wehner jumped ship for Facebook, its Treasurer, Mike Gupta, decided that he'd found greener pastures at Twitter: Zynga Inc. (ZNGA) Treasurer Mike Gupta is departing to take a similar role at Twitter Inc. as the largest […]
Report: There’s Nothing Extraordinary About Sandy
Companies are unlikely to be allowed to classify damage from Hurricane Sandy as “extraordinary” for financial reporting purposes, but may consider including additional disclosures on how their businesses were impacted, according to a report from PricewaterhouseCoopers. “Neither the September 11, 2001 terrorist attacks nor Hurricane Katrina in 2005 were considered to be extraordinary from an accounting […]
COSO’s Internal Control Framework Update Has Some Material Weaknesses
Oh my God. Last month, COSO released a post-public exposure version of its update of Internal Control – Integrated Framework. In February, George Lucas released Phantom Menace in 3D. Both of these caused nerds to cream their jeans. For Star Wars nerds who work in internal control, 2012 has been better than sex (a comparison […]
Let’s Take a Peek at Some of Mitt Romney’s Investments
Earlier today, Gawker's John Cook dumped nearly 1,000 pages of "internal audits, financial statements, and private investor letters for 21 cryptically named entities in which Romney had invested" for all of the Internet's viewing and dissecting pleasure. It's quite a lot to digest and he's looking for help digging through all of it but it's pretty […]
“Emerging Growth Company” Manchester United Ltd. Not Quite Ready to Take Advantage of All the Reporting Exemptions Under the JOBS Act
As you know, the Jumpstart Our Business Startups Act was made law earlier this year, in part, to exempt "emerging growth companies" (or "EGC" for you acronym junkies) from certain reporting and disclosure requirements. "Emerging growth companies" being those with less than $1 billion in revenues in a fiscal year and the best known exemption allowed […]
Comcast CFO Nerdily Points Out That, Technically, The Company Will Come Out Ahead on Olympics
On a call with analysts, NBCUniversal CEO Steve Burke announced that the network will break even on the Olympics, which is a pleasant surprise for the company since they initially projected a $200 million loss. Mr. Burke stated that he was strictly speaking on a "cash on cash basis" and then (this is my imagination […]
“Emerging Growth Company” Still Working on the “Emerging Growth” Part
Yesterday we discussed Ignite Restaurant Group, an emerging growth company ("EGC") under the JOBS Act, and their battles with financial reporting. Today we were introduced to another EGC, this time the company is WeRvaluecoupons.com who filed its Form S-1 with the SEC earlier this month. WeRvalue isn't quite as far along in the "emerging" process […]
“Emerging Growth Company” Still Trying to Get Its Accounting Figured Out
Earlier today, a little bird pointed us to an 8-K filed by Ignite Restaurant Group ("IRG") on July 18, 2012. In this filing we learn that IRG shared the always-riveting Item, "Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review." Observe: On July 18, 2012, the Board of Directors of […]
FASB on Intangible Impairment Testing: Just Eyeball It
All those carrying value versus fair value exercises? Yeah, the nerds in Norwalk say you can skip those, unless – and I'm stealing this example from Compliance Week – you've got a new Coke situation on your hands: The Financial Accounting Standards Board (FASB) today issued Accounting Standards Update No. 2012-02, Intangibles–Goodwill and Other (Topic 350): […]
As If the FASB Wasn’t Boring Enough, They Will Now Be Debating Semantics
Turns out, everyone is befuddled by the definition of "nonpublic entity": The Financial Accounting Standards Board has added a new project to its agenda to re-examine the definition of a “nonpublic entity,” as part of its efforts to reach out more to private company constituents. […] The decision by FASB chair Leslie F. Seidman to add […]
WFT Has Another WTF Moment with Its Tax Accounting
Remember Weatherford International? That's the company whose internal controls (or lack thereof) led to $500 million in tax errors and restatements going back to 2007. Also as a result, the Chief Accounting Officer left the company to "pursue another career opportunity." Not the company's finest hour. After such a harrowing financial reporting experience, one might […]
Kroeker Gets Cranky With the AICPA’s Private Company Accounting Ideas
Apparently SEC chief accountant James Kroeker does not appreciate the AICPA’s disapproval of the FAF’s new proposal to set up a Private Company Standards Improvement Council, calling the disapproval “a clear threat to the independence of the FAF.”
Accounting Today has the entire story but the short version is that Kroeker went off at Monday’s Standard & Poor’s Accounting Hot Topics Conference in New York, calling the AICPA’s resolution “egregious.”
In case you forgot, at last month’s fall meeting of AICPA Governing Council, members overwhelmingly approved a resolution that sent the Financial Accounting Foundation (FAF) a strong message: either FAF moves to adopt the Blue Ribbon Panel on Standard Setting for Private Companies’ (the Panel) recommendations for a separate board— which is the AICPA’s preference— or the AICPA will consider other options.
At that time, the AICPA made it clear that if FAF continued to pursue its current proposal, the AICPA board of directors would look at other solutions for addressing the needs of private companies. This could include creating a separate standard setting body to develop private company generally accepted accounting principles (PCGAAP) or a comprehensive private company-specific basis of accounting that would deliver meaningful, lasting improvement to private company financial reporting consistent with the Panel’s recommendations.
Maybe Kroeker should go hang with the AICPA and cuddle up to watch the upcoming webcasts that outline FAF’s proposal?
We’re not sure why Kroeker is so butthurt, nor why he would dare take on 350,000 CPAs by calling their wishes “egregious” but that’s a different matter entirely.