Monday, September 28, 2009

G-20: Converge Global Accounting Standards by 2011

Leaders at the recent G-20 summit called for a single set of high quality, fully converged global accounting standards June 2011.

This follows up on previous statements by the G-20 calling for a single set of global accounting standards and other accounting changes at summits held
last November and April.

In the Bush administration, Chairman Christopher Cox advocated published an IFRS
road map in the United States.

Following Mary Schapiro’s appointment as CES Chair, the SEC appeared to revisit and scale back the IFRS issue.

G-20 leaders also called on the International Accounting Standards Board (IASB) to “further enhance the involvement of various stakeholders.” Although the G-20 provided no specifics on how the IASB should enhance stakeholder involvement, the IASB’s parent organization, the IASC Foundation, is currently reviewing its constitution to include expanding the IASB’s liaison with other organizations such as regulatory agencies and other stakeholders..

Friday, September 18, 2009

SEC Reconfirms Thrust to Adopt IFRS

U.S. Securities and Exchange Commission will refocus on their IFRS roadmap.

The SEC's new chief accountant, Jim Kroeker, said in remarks to a New York State Society of CPAs conference in New York "Turning back to the roadmap will be an important priority for us this fall."

The roadmap would have U.S. companies adopting IFRS and filing financial results under IFRS by 2014, with the option for early adoption.

Kroeker said that in the 200 or so comment letters the SEC has received on the proposal, it was "resoundingly clear" that people agree there should be a single set of global high-quality accounting standards.

The comment letters identified, major differences in how different groups wanted to accomplish the goal of one standard.

Kroeker said the SEC staff, as "an important next step," would work on how to put into place various milestones to reach that goal.

Kroeker noted tha t convergence efforts to conform both sets of rules have been going on over the past few years. Recently the IASB and the FASB have accelerated certain convergence projects.

Kroeker implored standard-setters to avoid "a race to the bottom," where in a rush to converge the rules, accounting standard setters are urged to adopt the least controversial version of the rules, rather than the one that would best represent economic reality.

Kroeker said "A race to the bottom is an absolute concern I have," . "If we engage in a race to the bottom ultimately there will be no winner in that race."

Wednesday, September 16, 2009

IFRS Adoption Strategy

IFRS adoption is a complex multi-year process. It will absorb corporate resources—much like SOX implementation did for U.S. public companies. Muti-year programs should begin with a well mapped out strategy.

In setting their strategies, future IFRS adopters would be wise to leverage experiences of adopters in Europe, Australia and Canada. But also and more importantly at the planning stage, another source of leverage in the process may be leveraging the resources and experience of internal audit and SOX management. Journal of Accountancy had a recent article on this.

Some of the main points:

Based on the current SEC road map, your company will need to evaluate how to perform U.S. GAAP/IFRS parallel accounting over a multiyear period.

In creating a parallel accounting environment, your internal control and operational audit staff may need to consider the ramifications of modifying your company’s systems and processes.

Internal control and operational audit staff are in a great position to assist your company in evaluating impact areas with the IFRS conversion. Their financial and accounting backgrounds, combined with the knowledge of the underlying processes and systems, will provide in-depth knowledge for conversion planning.

It is critical for internal control and operational audit staff to get involved early to help guide the company in the planning and to ensure that their portion of the overall conversion cost estimate is included.

Strategic IFRS Planning Questions for ICFR (SOX) Management

  • How many resources should be assigned to the IFRS conversion project team?
  • Do the personnel have adequate accounting training to understand the differences between U.S. GAAP and IFRS?
  • Can the current SOX 404 process and systems documentation assist the company in estimating change impacts?
  • Does the company have sufficient resources/flexibility to handle the increased controls testing?
  • What can ICFR staff do to assist with mitigating the risks of change management in this significant conversion process?
  • Is there IT knowledge within the department to assist in identifying risks that may arise for system modifications for the parallel accounting period?

Tuesday, September 15, 2009

Best Financial Jokes of 2009

From the National Post. Not many true accounting jokes.

Timothy Geithner was out jogging without his guards. All of a sudden a man with a ski mask jumped out from behind some bushes with a gun.The masked man said “Give me all your money!”Unwilling to do so, Geithner said, “You can’t do this, I’m the US Federal Treasury Secretary!”The man then replied,... “Oh, never mind then. Give me MY money!”

Bank of America-Merrill Lynch has adjusted its investment portfolio: 50% cash and 50% canned goods

Well, the wait is over. The Obamas have chosen a new White House dog. It is a Portuguese water dog named Bo. Very cute dog. Their first choice was a wheaten terrier, but it was arrested for tax evasion. - Jimmy Fallon

Barack Obama’s daughters are very smart. They told him they will take the same responsibility for the dog that he is taking for the economy. That way, if the dog leaves a mess in the White House, it’ll be cleaned up by future generations. - Jay Leno

Banks want to return $68 billion in bailout money to the government. They were upset at all the hidden fees

I have an uncle down at Wall Street. He used to have a corner on the market. Now he has a market on the corner.

General Motors claims its new electric car the Chevrolet Volt can get up to 230 mpg in city driving. Unfortunately, in order to do so the car must first be plugged into the back of a city bus.

Lego reported a 60% rise in profits for the first six months of 2009 as it said parents were turning to its building blocks during a recession, both as toys for their children and as a basis for new homes after losing their old ones to foreclosure.

The courts allowed the bankruptcy proceedings for Chrysler to go forward. The bankruptcy was approved after the judge told Chrysler to sit in a room for a few minutes while the judge went to talk to his manager.

Barack Obama, who has a reputation for being a hands-on president, said he will not get involved in the day-to-day operations of the auto company. Obama may not take the wheel of GM, but he plans to be an annoying, backseat driver.

Resolving to surprise her husband, an investment banker’s wife pops by his office. She finds him in an unorthodox position, with his secretary sitting in his lap. Without hesitation, he starts dictating, “…and in conclusion, gentlemen, credit crunch or no credit crunch, I cannot continue to operate this office with just one chair!”

How many stockbrokers does it take to change a light bulb?Two. One to take out the bulb and drop it, and the other to try and sell it before it crashes (knowing that it’s already burned out).

Stockbroker: What is a million years like to you?God: Like one second.Stockbroker: What is a million dollars like to you?God: Like one penny.Stockbroker: Can I have a penny?God: Just a second ...

Pfizer is offering free drugs including Viagra for those who recently lost their jobs. Good to see the private sector and not just government providing a “stimulus package.”

Organizers of the “Buick Open” have assured the press that there are no hard feelings towards GM for their decision to end sponsorship, and that from now on the event will simply be referred to as the “Toyota is BIGGER than GM Open”.

David Letterman’s Top Ten Questions Bernie Madoff Asked Today in Prison
10. Has it been 150 years yet?
9. Who do I have to swindle to get a freshly-pressed jumpsuit?
8. Which way to the penthouse cell? 7. Because of my business dealings with the Latin Kings, can you keep me away from the Crips?
6. What mixes better in a toilet, sangria or daiquiris?
5. Will I get special treatment if I help the guards hide money from the IRS?
4. I’d like the truffle-crusted halibut.
3. Did I mention that it was an April Fools’ prank that just got out of control?
2. Will someone TiVo “America’s Got Talent” for me for the next 149 years?
1. Is it ok if I decline a conjugal request from my wife?

"Anybody ever been in prison? Bernie Madoff, the nasty, awful swindler, he's going to be there for 150 years. You know what he did? He hired a prison consultant. I think it's Martha Stewart." - David Letterman

Monday, September 14, 2009

Survey Says IFRS Still Alive in U.S.

A recent survey by Deloitte of over 245 financial executives from July 2009 indicates "green shoots" in what otherwise might have thought to have been an IFRS planning process that was slowing down or dead ending. In the wake of the financial crisis, other surveys indicated tha t resources allocated to IFRS were being cut back. Many thought that companies would be scaling back their activity around IFRS planning. The survey indicates that the overall thrust behind IFRS preparation in the U.S. may still be strong.

Survey highlights

89% of respondents indicated their companies
• viewed IFRS conversion to be highly or somewhat likely to become mandatory in the U.S.

Fifty-nine percent (59%) viewed mandatory conversion in the U.S. as highly likely.

Over two-thirds (67%) of respondents indicated
• that their company had designated a person or team to focus on IFRS or monitor IFRS developments

Eighty percent (80%) of respondent companies
• are positioning themselves to address IFRS: 40% are performing or have performed a high-level IFRS assessment, while 40% plan to perform an assessment.

When it comes to seeking outside assistance with planning activities, such as assessments, some respondents indicated that their companies are accessing help from either their external auditor or another outside professional services firm.

The survey indicates that approximately sixty percent (60%) of companies who performed or are performing a high-level IFRS assessment sought or are seeking external assistance.

However, a significant number of respondents (around 40%) are taking on the task themselves. Given the economic climate and the pressure on cost-reduction, the go-it-alone strategy may not be surprising.

For post-assessment plans, many survey respondents are looking at cross-functional approaches that include not only accounting, but also tax, technology/systems, and training personnel/human resources.

The SEC will likely be discussing its proposed roadmap in the fourth quarter.

Wednesday, September 2, 2009

Another SEC Fraud Bust

SEC Charges Terex Corporation with Accounting Fraud

The Securities and Exchange Commission (SEC) charged Terex Corporation, a Westport, Connecticut-based heavy equipment manufacturer, with accounting fraud for making material misstatements in its own financial reports to investors, as well as aiding and abetting a fraudulent accounting scheme at United Rentals, Inc. (URI), another Connecticut-based public company.

The SEC's complaint alleges that Terex aided and abetted the fraudulent accounting by URI for two year-end transactions that were undertaken to allow URI to meet its earnings forecasts. These fraudulent transactions also allowed Terex to prematurely recognize revenue from its sales to URI.

The fraud occurred through URI's sales of used equipment to a financing company and its lease-back of that equipment for a short period. As part of the scheme, Terex agreed to sell the equipment at the end of the lease period and guarantee the financing company against any losses. URI separately guaranteed Terex against losses it might incur under the guarantee it had extended to the financing company.

Without admitting or denying the SEC's charges, Terex agreed to settle the Commission's action by consenting to be permanently enjoined from violating the antifraud, reporting, books and records and internal control provisions of the federal securities laws and by paying an $8 million penalty.