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Not Another Task Force

Posted on by Adrienne Gonzalez

GOVT.jpgEditor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
Our dear President has created a “Task Force” to handle those tricky problems like baby Madoffs so we can sleep at night knowing we are safe from the financial crooks robbing us blind.
Or can we?


WaPo:

Top Obama administration officials on Tuesday announced a new federal task force to combat financial fraud after deciding that the number and complexity of investigations linked to the economic crisis require a more coordinated response from government agencies.
Created by executive order, the Financial Fraud Enforcement Task Force targets fraud related to mortgage lending and modification, securities law, stimulus spending and the government’s bailout of the financial sector.

Meanwhile, in absolutely related news, ABC News discovered this week that Recovery.gov shows stimulus funds saving or creating jobs in Congressional districts that don’t even exist. There are tons of them so no one tell me that it’s a rounding error.
Oh wait, they admitted they screwed up and are now fixing it.
Back to this “task force.” Maybe I’m confused but don’t we already have something like that and it failed to get the first Madoff?
The Department of Justice-led task force will include officials from the SEC, Treasury, and Department of Housing and Urban Development. Sounds like a winning crew.
Attorney General Eric Holder insists that one of the task force’s main targets will be “Recovery Act and rescue fraud,” insisting “we will ensure that the taxpayers’ investment in America’s economic recovery is not siphoned away by a dishonest few.”
A dishonest few?
Like the 95 completely made up people on the Recovery.gov website who worked on that sewer project in Wisconsin?
Or the Georgia Head Start administrator who was advised to claim “317” jobs where his organization had really only gotten raises for its 317 employees?
The AP has been watching the stimulus numbers closely, and they continue to check out wrong. It doesn’t take an accountant, nor a task force, to figure that out.

Related Posts

A FASB Override Button?

Thumbnail image for Thumbnail image for Thumbnail image for panic.jpgEditor’s Note: Want more JDA? You can see all of her posts for GC here, her blog here and stalk her on Twitter.
Over the weekend, I covered an obscure financial reform proposal that may mean taking away final responsibility of accounting standard-setting from FASB af “emergency” switch for use solely in situations of undue financial stress. This type of “escape hatch” might be familiar; the practical application of the Fed’s 13(3) rule left the door wide open for Bear Stearns and AIG.


In regards to Meet the FASB Override Button, I received a note from reader Ron with the simple rhetorical question:

Do you think a system this corrupt can survive in its present form?

He even gave me an out, qualifying the email with “No need to reply.”
Well thanks, Ron, but how in the hell am I supposed to ignore a loaded question like that?
In the article, HuffPo calls it “Civil War in Corporate America”:

Amid the ongoing financial regulation overhaul, the banking industry is hoping to pull off a quiet power grab that has eluded its grasp since the Great Depression, by stripping the independence of the board that sets financial accounting standards.
The mechanism is contained in an amendment set to be introduced in mid-November by Rep. Ed Perlmutter (D-Colo.) that would move final authority over the Financial Accounting Standards Board (FASB) from the Securities and Exchange Commission to a new body, a so-called “oversight” board, that would include the officials charged with managing systemic risks to the financial markets.

The Center for Audit Quality came back with a nasty letter to Barney Frank — among others — insisting that accounting setters must remain independent (implying that they have been all along). I assume that the CAQ has forgotten about FAS 157-e by now.
So do I believe in financial reform at this point? No, and I can’t say I ever did. Did I ever believe we could duct tape our way through recovery with a little accounting magic and some confident words from Tim Geithner? Yeah right.
And that therefore betrays my opinion on saving our financial system in its current form. FASB merely exists under the guise of independence, and while European accounting standard setters have a far worse reputation when it comes to allowing themselves to be politically swayed, something must change moving forward.
I doubt that an emergency FASB override button is a step in the right direction to that end.
But if they’re trying to sneak in accounting standard escape hatches, that means something must be working correctly with the currently regulatory framework – they wouldn’t be looking for ways to bypass it if it was totally useless.
Past GC coverage of Congress meddling in accounting rules:
Congress Needs More Testimony on Accounting Stuff They Won’t Understand
Barney Frank Doesn’t Legislate Accounting, He Only ‘Exerts Pressure’
Newt Gingrich Doesn’t Like the FASB

Here’s Your Study Plan for the Audit Section of the CPA Exam

Friendly reminder: >75 is here to answer your CPA Exam questions so send them over.

A reader sends us the following dilemma:

“I took the audit section only and failed, most of it was due to not committing enough time to it. If you have any tips to develop plans I would like any suggestions to creating a plan.”

First of all, no offense but I think you have already identified where you went wrong, are you sure you need our help? Oh well.


Let’s talk about Audit, shall we? The average CPA exam candidate will spend 60 – 90 hours studying for the Audit section – that assumes watching your CPA Review lectures 1 time and spending 2 – 3 hours on MCQ/sim practice problems for each hour of lecture. If you are taking the self-study route, you will obviously need to spend more time on MCQ/sims (about about 2 or 3 hours on top of the 2 – 3 you would be doing if you had videos to review) and create a structured study plan based on the most current CSOs (Content Specification Outlines), which you can always find on cpa-exam.org.

Those of you taking exams in early 2011 will want to be on top of exam changes planned to kick in in the first quarter, though the AICPA has been helpful and already released the CSOs for that period.

If you’ve taken the exam and failed, you already have an incredibly useful tool at your disposal – your score report. The report provided after you fail will compare you to other candidates: IGNORE THOSE NUMBERS. Who cares how you did relative to other candidates? All you need to glean from that information is an idea of where your stronger areas are in comparison to your weaker sections. The score report is broken down by different components of the CSOs for that section so obviously you will want to focus harder on areas that you performed poorly in.

About a week or two before your new exam date, give the entire section a once over just to be sure you are also sharp in areas you did well in the first time.

Schedule your new Audit exam AS SOON AS POSSIBLE as the information is still fresh in your mind. If you have a new exam scheduled in the meantime, reschedule it if you can. Unless you REALLY bombed Audit (68 or below), you will want to jump right back in while it is still floating around in your brain.

As for exam preparation and planning, we’ve covered that plenty of times on Going Concern so check out this, this, and this.

Regulatory Agencies’ Final Word on FAS 166/167

rules_1668_1668.gifThe Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision released their long-awaited final word on new rules for securitized assets, specifically for bank balance sheets:

The federal banking and thrift regulatory agencies today announced the final risk-based capital rule related to the Financial Accounting Standards Board’s adoption of Statements of Financial Accounting Standards Nos. 166 and 167. These new accounting standards make substantive changes to how banking organizations account for many items, including securitized assets, that had been previously excluded from these organizations’ balance sheets.

What does this mean for banks? In simple terms, they’re no longer going to be allowed to hide massive amounts of SPEs and derivative exposure off their balance sheets. Hit the deck!

Banking organizations affected by the new accounting standards generally will be subject to higher risk-based regulatory capital requirements. The rule better aligns risk-based capital requirements with the actual risks of certain exposures. It also provides an optional phase-in for four quarters of the impact on risk-weighted assets and tier 2 capital resulting from a banking organization’s implementation of the new accounting standards.

In case your ass has been under a rock for the last year, FASB came after banks’ asses over the summer. Miraculously, the Fed encouraged this switch, leading me to believe they’re just trying to cover their tracks.
Quadruple Whammy: Regulatory Agencies’ Final Rule on FAS 166/167 [JDA]
See also:
FASB Changes, Toxic Asset Shuffle