Archive for June, 2010

Junior Deputy Accountant is vacationing, and I offered to write a guest post.  Since the news of the day is the SCOTUS (Supreme Court of the United States) decision on SOX (Sarbanes-Oxley Act of 2002), that’s what I wrote about.  Please check out my commentary, “SCOTUS to PCAOB: Do Not Go to Jail; Do Pass Go and Go, Go, Go,” over at Junior’s most excellent web site.

JDA appears all over the net, at JrDeputyAccountant, fan favorite Going Concern, and many other sites.

Some of you love all things SOX. Oops, that’s Sarbanes-Oxley instead of White or Red. Some of you hate all things SOX (especially if you are a Yankee fan and are thinking about Boston). Those that hate Sarbanes-Oxley are trying either to maim it, or kill it.

Maiming is a fait accompli, given that a provision was added to the Dodd-Frank Wall Street Reform and Consumer Protection Act exempting companies with market caps of less than $75 million from 404-b requirements (auditors must opine on internal controls).

Homicide has always been the back-up …

Continue reading at:  “SCOTUS to PCAOB: Do Not Go to Jail; Do Pass Go and Go, Go, Go

Debit and credit – – David Albrecht

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BP has been called lots of unflattering names.

BP. British Petroleum.  Beyond Petroleum.  Big Profits.  Biggest Polluter.  Broken Promises.  Beyond Patience.  Big Problem.   Blatant Polluter.   Bought Politicians.   Black Plague.   British Phail.   Bloated Porpoises.  Bye-bye Planet.  British Poopy.

The Summa is an accounting blog, but today the focus is accountability.  It’s lamentable that there are no accounting rules for accountability.

Calling BP names (see the first paragraph) is a signal that citizens wish to hold BP accountable for fouling the Gulf.  So is satire.

In today’s post, I’ll bring you the best satire on Youtube about the 2010 BP oil spill.


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What kind of mess will this legislative provision give us?

No clever titles this time.  I’m putting my message into this post’s title.  A soon to be enacted congressional provision is a big mistake!

According to “House Agrees with Senate on SEC Self-Funding” at Jim Hamilton’s World of Securities Regulation,  Congress has added a provision to the financial reform bill (currently in committee to iron out differences between the House and Senate versions) that removes the SEC from the federal budget.  Presumably, the SEC will levy a tax on SEC registrants.

In support of SEC self-funding, SEC chairs always argue in public that they lack sufficient and consistent funding to enforce securities laws and regulations.  As proof, they point out that Congress occasionally cuts back on SEC funding.

What they don’t mention is that the budgetary review process provides an opportunity for Congressional oversight of the SEC.  When the SEC is performing poorly, say due to the poor leadership of the Chairs (i.e., Cox and Schapiro), a Congressional budget cut is a natural and effective response.  Of course SEC chairs want self-funding, it gives them a pass from oversight.  Who wouldn’t want that?

Moreover, giving a governmental agency a free hand in levying taxes (or fees) leads inescapably to exorbitant rates and inefficient service.  A great example of this is the Ohio Turnpike Commission which manages the I-80 toll road across northern Ohio.  When faced with no further need for its existence, it instead raised rates several times and spent money on projects unrelated to the toll road.  Need I say that the commissioners are paid exorbitantly?

The SEC should not be rewarded after several recent failures.  Its staff has failed to investigate tips of historic frauds (e.g., Madoff).  Moreover, its oversight of the FASB has been non-existent.  I think we need to disband the SEC and start over from scratch.  Providing permanent funding is as wrong as it gets.

Unfortunately, I am writing in hindsight.  The Conference Committee hammering out compromise legislation between the House and Senate versions has already agreed to the self-funding.  Democrats control both chambers of Congress and eventual passage is assured.  Please recall my earlier comments that Congress should not be permitted, under any circumstances, to create financial regulation legislation.

P.S.  Victory!  SEC self-funding was dropped from the final version of the bill.

Debit and credit – – David Albrecht

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Today is one of those days.  Today is an accountant’s birthday.  Mine.

The most important task of the day is to replace the battery in my calculators.  I’m an old accounting professor, so not all need batteries:

Like any good accountant, I look in the files to see what I did last year.  Two things:  changed batteries in my calculators and went in for a check up.

With a confident step, I walked into the doctor’s office.  “Hey Doc, do my assets still exceed my liabilities?”

After a quick glance and with a hint of condescension, “No.  You’re too old.”

“No analytic testing?  No work papers?  I want a second opinion.”

“You’re ugly, too.”

When paying my bill, the office manager said, “The Doctor wants me to stress that you shouldn’t use candles on your birthday cake.  This is what happened when another boomer accountant tried it.”

Too many candles

Is it written in the accountant’s handbook that one must always add another year when having a birthday?  This year, I decided to subtract from my previous age instead of adding.  Coincidentally, I have less grey in my hair and a bit less flab around my middle.

Unfortunately, this turned me into a bad accountant.  Sam Antar would call it birthday fraud.  It leads directly to off-balance sheet financing and cooking the books.

Not wanting to get the following card for next year’s birthday,

Accountant juggling numbers.

I quickly started admitting to my correct age.  But I’m not going to tell you what it is.

Debit and credit – – David Albrecht

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Warning: Accounting Convergence Ahead

Is accounting convergence dead?

I surely hope so.

Robert Herz  just announced a delay.  Here’s how I got it.  Bob Herz (current Chair, FASB) sent Denny Beresford (former Chair, FASB) an e-mail.  Denny sent it to Bob Jensen (retired faculty, Trinity University).  Bob sent it to me:

From: Robert Herz <rhherz@fasb.org>
Date: Wed, 2 Jun 2010 07:54:42 -0400
To: dberesford@terry.uga.edu;  Norman.Strauss@baruch.cuny.edu
Subject: FW: Reuters Update

Hi Denny and Norm . In case you haven’t already seen this . I will elaborate a bit more in my opening remarks tomorrow . See ya then .


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My month of May hiatus is over.  I’m back to work.

Next week (June 7 & 8), I’m conducting a workshop on academic blogging at my home institution.  It is a bit off topic to blogging about the world of accounting and auditing, but perhaps I can adapt some of my presentation for publication here.

On and off (but mostly off), I’ve been working on an article on the importance of blogging to a recent Hollywood film, Stranger Than Fiction.

Some of you might have figured this out before now, but lounging around and doing nothing for a couple of weeks is addictive.  I wouldn’t call it smelling the roses, more like smelling the dirty laundry piling up.

Debit and credit – – David Albrecht

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