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Archive for December, 2011

Miscellany — interesting items that caught my eye during the week.


From Bloomberg Businessweek, “Top B-School Stories of 2011.”


Real Life Adventures, a nationally syndicated daily cartoon strip by Gary Wise and Lance Aldrich, perfectly catches the fundamental flaw of the audit model on December 8, 2011.


I like “The Promise and Perils of Academic Blogging,” a think-piece by W. Bradford Littlejohn at The Sword and the Ploughshare.


Ed Ketz and Tony Catanach share their “A Christmas List for Grumpy Old Accountants.”  I hope they get everything they ask for.


Tom Selling shares his dreams if he were the SEC’s Chief Accountant in “IFRS Convergence: Let’s Play ‘Chief Accountant for a Day’!


The Institute of Management Accountants, caretaker for the Certificate of Management Accounting, has its complaints aired about the AICPA’s plan for a competing credential in the AccountingWeb article “IMA Ready to Compete with AICPA/CIMA Management Accounting Designation.”


Debit and credit – – David Albrecht

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Best of The Summa 2011

An annual tradition at The Summa is to provide links to my favorite posts of the year.  The purpose for doing so is to milk a few more reads without having to write new content. I’ve reviewed the posts from the fourth year of The Summa, and have selected my favorites.

In January, I had two interesting posts.  In the first, “Audit Credibility,” I argue that current audit model is flawed, and the flaws remove any potential benefit.  I talk about the entity theory approach to the accounting for executive stock options in, “Floyd Norris on Joe Lieberman’s Views on Accounting.”  It should be noted that Floyd posted a response to my blog post because he didn’t like what I wrote.

In February, there are two posts worth mentioning.  The first is “An Accountant’s Valentine,” written for my special someone. The second is “An Example of Corporate Honesty.”

In March, I wrote two posts about data visualization, and one on the problem posed by the hard drives on photocopy machines.

I still like my post for April first, “SEC to Promote Cash Basis Accounting?

In May, I wrote, “IFRS, Whither Art Thou?

In June, my favorite is, “SEC Morale Bad and Getting Worse.”

In July, I posted an advice piece, “LinkedIn for Accounting and Business Students.”

In August, I wrote, “The PCAOB and Its Quixotic Quest.”

In September, I wrote, “Is Inflation a Problem for Accounting.”

In October, I wrote, “If U.S. Declaration of Independence Had Been Signed by Audit Firms.”  This post was selected a wordpress.com favorite.

In November, I wrote, “ProfAlbrecht’s Use of Social Media.”

In December, I wrote about an aspect of auditor quality called, “The Wrong Quality.”

Debit and credit – – David Albrecht

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Good Writing

Writing and speaking properly are important for financial professionals, professors and students.  Although there are no grammar police walking a beat, a poorly worded communication has the potential to offend the receiver.  Giving offense is bad because it distracts from the message.  Here is an example.

Two people meet, and one says to the other, “How are you today?”

The other responds, “I am good.”

The proper response is, “I am well.”

I have heard many anecdotes of the heavy cost incurred by financial professionals who write or speak poorly, for it is not unusual to lose business as a result of unpolished prose.  Moreover, there are significant benefits to writing and speaking properly.

Why do I blog about this today?  A recent discussion on AECM (e-mail listserv for accounting professors) focused on the proper use of active and passive voice.  Although some say that it is bad to use passive voice, it really isn’t.  It depends upon meaning and style.

In my opinion, a balanced program of continuing professional education (CPAs must take at least 40 hours per year) should include instruction in writing and speaking properly.  I would be happy to offer these CPE sessions, should any state society wish to hire me.

It takes a tremendous effort to learn proper English.  Like most, I learned proper English from reading.  After teaching myself to read, I read hundreds of magazine short stories, thousands of science fiction novels, countless newspaper sports pages and many encyclopedia articles.  If you don’t like to read, realize that you are limiting yourself in much the same way as not regularly bathing, or even not brushing your teeth.

Then there are the K-12 courses in English, endured but not enjoyed.  I took English literature courses in college, which not only provided instruction in writing, but also provided many opportunities to practice.

Being able to practice writing is the final building block.  Written communications, papers in school and perhaps even short stories give writers the necessary exercise to build their Enlgish muscles.  Always there is the goal of doing a better job of expressing thoughts, emotions and depictions of events.

Web sites can supplement the learning process, but they do not substitute for the reading and practice.  For the AECM issue of active or passive voice, a visit to the Grammar Girl blog provides guidance.

For an entertaining look at proper wording, visit the Terribly Write blog.

Bob Jensen (emeritus professor from Trinity University) has some links to writing helpers (wait 10 seconds for page to load).

[Editing is very important.  Failure to spot an error can lead to embarrassing errors.  Thanks to Gary Zeune for spotting one that was in the first sentence.]

Debit and credit – – David Albrecht

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No Procrastination Allowed

I am in the classroom only 12 hours per week (and not at all during the three week holiday break), yet no one ever asks what I do with the rest of my time.  Everyone, it seems, possesses sufficient manners and good sense to be polite.

Some academics (grad students and professors alike) work all the time.  There is no on-off switch for the brain.  If I am awake, I’m thinking about grand issues in accounting, and a few not so grand such as the U.S. fixation on IFRS.

Reading PhDComics is my guilty pleasure, secret no more.  Today’s comic is hilarious.

"Piled Higher and Deeper" by Jorge Cham http://www.phdcomics.com

I agree, it is time for all academics to get back to work.

To my co-author:  Expect an e-mail, tomorrow.

To my Dean:  I’m really working on research during this break.  Honest.  You can believe me this time.

To my undergrad students:  Read the first three chapters of the textbook, and be ready for a quiz on the first day of class.

Debit and credit – – David Albrecht

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The AICPA on December 17, 2011, released the winners for the 2011 student case competition. A team from North Carolina State University has won.  A team from Iowa State University claimed second place, and a team from University of Texas at Dallas finished third.

The North Carolina State team, named Wolfpack in the Black, is comprised of members Alan Perry, Seanna Robey, Brian Jones and Amanda Dew.

The Iowa State team, named Internal Control Freaks, is comprised of members Matt Allbee, Courtney Ekeler, Leesa Tjernagel and Adria Staky.

The University of Texas at Dallas team, named Highly Debticated, is comprised of members Amanda Billingsley, Ben Harwood, Thomas Matter and Teresa Tran.

Congratulations to all.

Debit and credit – – David Albrecht

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Book cookers should get coal from Santa.

Don’t know about you, but I like listening to Christmas music.  Religious, traditional classics, or even Mariah Carey, it doesn’t matter.

Sometimes it seems as if some of the songs were written for accountants and auditors.  Yes, buried deep in the lyrics are accounting and auditing standards.

Here’s an example.  For all those corporate execs who have been manipulating financial statements, here’s a warning from Santa Claus is Coming to Town:

He’s making a list
And checking it twice;
Gonna find out Who’s naughty and nice
Santa Claus is coming to town
He sees you when you’re sleeping
He knows when you’re awake
He knows if you’ve been bad or good
So be good for goodness sake!

I’m sure that if a large firm audit partner has let a client skate away from honest financial statements, there will be a lump of coal in his stocking this year. Santa is the accounting cop that the Securities and Exchange Commission (SEC) should be.  I nominate Santa for the head of the SEC Enforcement Division.

The purpose of this post is to write about Generally Accepted Accounting Principles (GAAP) for Christmas accounting.  These are rules for preparing financial statements based on the principle that it is better to give than receive.

In North America, a common question at this time of year is when to open gifts, Christmas eve or day.  We’ve done it both ways in my family, but this year we’re waiting for some time during the day.

How will you account for the gifts?  I expose the following standards:

1. Revenue is a function of what you give away.
2. Expense is a function of what is received.
3. You are in the the black of you give more than you receive.

A North American tradition is to exchange gifts.  Exchanging gifts doesn’t really count under this proposed standard.  You get points only for giving gifts that aren’t expected.  You lose points if you outsource.

On the balance sheet, assets and liabilities are reversed.

4. Assets are the gifts given that remain to be consumed.
5. Liabilities are the gifts received, whether consumed or not.
6. It is good if equity is positive.

Assets are to be valued at fair value, naturally.

If your P/L statement shows red this year (excess of expense over revenue), then now is the time to start planning for next year.

Debit and credit – – David Albrecht

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I’m late to the holiday season.  For many professors, December is a whirlwind of activity.  There are topics to be covered in the final class periods, questions to answer for students, exams to create, and then test papers to grade. After turning in grades, it is customary to sleep for at least 24 hours.  Upon waking, there are only a couple of days left until Christmas, a holiday that my family and I observe. This doesn’t leave much time to get ready for Christmas.

I am an academic commuter.  Professing this year at Concordia College in Moorhead, Minnesota (part of Fargo metropolitan area), I have quite a drive to get back to the family in northwest Ohio.  My sons have returned home.  The elder recently took a new job two hours away.  The younger is pursuing a graduate degree two time zones away.

Both seem to be well along in the holiday spirit.  How do I catch up and get the Christmas spirit?  The following videos remind me of Christmas.

I really like the Irving Berlin classic, White Christmas, sung by Bing Crosby and Marjorie Reynolds in the 1942 film, Holiday Inn.  It won an academy award for best original song.

Music has always made a meaningful addition to my life.  Although Carol of the Bells is not a traditional religious carol, I like it.  Jake Justice (piano) and Jaxon Williams (classical guitar) do a good job with their arrangement and performance.

Staying with a classical guitar theme, here is Richard Johnson playing some Bach.

Freshly posted to Youtube is this medley performed competently by chambwp.

Seasons greetings to all.

Debit and credit – – David Albrecht

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