Archive for May, 2011

Today, May 30, 2011, is Memorial Day in the USA.  It is different, to say the least.  Originally dedicated to fallen soldiers of the USA Civil War, it now marks the start of the summer vacations.

Immediately after the end of the Civil War, there were many local ceremonies honoring slain soldiers.  A fraternal organization for surviving soldiers of the Union Army designated May 30, 1868, for placing flowers (decorating) on the graves of Union and Confederate soldiers buried in Arlington National Cemetery.  Decoration Day was born.  Eventually the day was broadened to honor the fallen of all the armed services.

In 1915, Moina Michael wrote:

and started selling red poppies to raise money for impoverished veterans.

In 1971, the U.S. Congress changed the date of Memorial Day to the last Monday in May, coupling the day to a weekend.  That changed everything.  No longer a day only for remembering fallen soldiers, it is now a weekend signalling the start of summer and the many days of play sure to follow.  Memorial Day has been secularized.  I wish Congress would decouple Memorial Day from weekends, and restore Decoration Day to May 30.

Today, I ask my American readers to spend some time in remembrance of those who have fallen in military service to the country, and to reflect on the significance of their sacrifice.

Debit and credit – – David Albrecht





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Three topics are hitting the accounting news sites.  I’m just passing along announcements.


Work Plan for the Consideration of IncorporatingInternational Financial Reporting Standards into the Financial Reporting System for U.S. Issuers:  Exploring a Possible Method of Incorporation

A Securities and Exchange Commission Staff Paper

May 26, 2011

I will be commenting on this next week.  In the meantime, read the FEIblog summary here.


The FASB and IASB have been working on leases.  The accounting for leases has been a problem area for many, many, many years.  I’ve not commented on it yet.  With the current proposal, neither corporations (and their paid auditors) nor investors are happy with the proposed rule.  The latest change is a prime example of why the IASB will not produce US-useful accounting numbers.

Edith Orenstein at the FEI Blog has a good write-up on the latest, “Preparers Concerned About Change In Direction In FASB, IASB Leasing Proposal.”

# Shareholders to Become SEC Reporting Registrant

Jim Hamilton’s World of Securities Regulation, one of my most trusted and useful news sources, has a new piece out, “House Legislation Would Raise 500-Shareholder Threshold for Reporting Against Backdrop of SEC Review of the Trigger.”  I’ve been wanting to write on this issue for some time.  The Jim Hamilton Blog reports that new legislation has been proposed, increasing the number of shareholders required for enhanced disclosures from 500 to 2,000 shareholders of record.  This will be useful to many large companies, such as Facebook, to ignore the light of the public eye.  This proposed legislation is corporation friendly and investor unfriendly.

Debit and credit – – David Albrecht

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Accosting the Golden Spire, by D. Larry Crumbley

About a week ago or so, I received a package from Larry Crumbley containing one of his educational novels, Accosting the Golden Spire.  Last night I read it.  It was a fun read.

D. Larry Crumbley, CPA, Cr.FA, CFFA, FCPA, is the KPMG Endowed Professor at Louisiana State University.  A tax professor, he has been a prolific author.  He has written 55 books in whole or in part, including 13 educational novels.  He is the author (or co-author) of over 100 journal articles.  Honestly, it would take me a half dozen lifetimes to accomplish all that he has in one.

Larry is passionate about writing.  He is also very good.  Strike that, he is excellent, at least in his fiction works.

Why does he write educational novels? From a newspaper article reprinted on the LSU web site:

Crumbley said he writes novels about forensic accounting because people tend to learn better about a subject when it unfolds in the form of a story. “Hopefully, I’ve made forensic accountants popular, because the main characters in my novels are forensic accountants,” he said.

From the New York Times (April 17, 2011), Crumbley is quoted as saying,

All my novels have massive plots and I kill a lot of people.  If I teach a tax [or accounting] principle and it involves someone getting shot, people will remember that.

Larry has written 13 novels.  His first three (including Accosting the Golden Spire) were published in 1988, the most recent (Trap Doors and Trojan Horses) was published last year.  They include:

  • Dangerous Hoops: A Forensic Marketing Action Adventure
  • Big R: A Forensic Accounting Action Adventure
  • Trap Doors and Trojan Horses
  • Deadly Art Puzzle: Accounting for Murder
  • Simon the Incredible.
  • The Bottom Line is Betrayal
  • Costly Reflections in a Midas Mirror.
  • Accosting the Golden Spire
  • The Ultimate Rip-off: A Taxing Tale
  • Computer Encryptions in Whispering Caves
  • Chemistry in Whispering Caves
  • Nonprofit Sleuths: Follow the Money
  • Burmese Caper

Accosting the Golden Spire is not a great work of fiction.  It is, however, great entertainment.  There is a difference.  I only read great works when I am forced to, such as when they have been assigned for a literature class.  I read entertaining novels because I want to for the fun and enjoyment.  As I say, Accosting the Golden Spire is great entertainment.

It is also educational.  Crumbley’s formula seems to contain three ingredients:  (1) a story about taxes, fraud or auditing, (2) including several details about the tax, fraud or accounting issue, and (3) abruptly inserting a paragraph about some accounting issue that is unrelated to the storyline.  I can see how students would like the first two ingredients.  Ingredient 3, however, is annoying.

Can a student learn about accounting by reading one of Crumbley’s novels?  Yes, especially if it is about a fraud auditing issue. Will all students learn by reading a Crumbley novel?  I’m not so sure.  However, I think that most students will learn as much, if not more, from a Crubley novel than from a textbook.  More importantly, I think the lessons will be retained for a much longer period of time than from traditional instruction.

I like Accosting the Golden Spire, and think it can be used in an auditing or forensic accounting class.  If you are looking for something to freshen up your classes, then have them read this book and then evaluate what the investigator did correctly, and incorrectly.

Why do I like the novel?  It is entertaining, and as satisfying as many Hollywood movies.  This is not a dull, dry, boring  book.  The novel starts off which a character sketch of one of the bad guys (there are others).  This one kills a little dog (for peeing on his front door), in a a fit of temper hurls a brick through a restaurant’s front window because management wouldn’t seat him on a busy night, frames a professor for plagiarizing, and kills another professor.

It deals with a fraud investigation.  Of course, there’s the original fraud.  Then there’s the framing of the fraud investigator, the framing of the fraud originator (by another bad guy), and how the fraud investigator figures it all out.  And, it is competently written.  The plot has twists and turns, most of which I was unable to see coming.

I had enough enjoyment that I ordered his latest novel, Trap Doors and Trojan Horses.  I expect it to be entertaining, and I’m curious to see how his writing style evolved from 1988 to 2009.  As an indication of my sincerity, here’s the receipt from my order:

Debit and credit – – David Albrecht

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Rose Orlik of Accountancy Age

A new story at Accountancy Age by Rose Orlik, “EU green paper calls for softer stance on audit,” reports that a more balanced approach is being considered for auditors and the audit opinion.  If this change sticks, then world-wide audit firms will rejoice.

Orlik writes, “An EU green paper on audit is currently being prepared, the investigation being headed by European Commissioner for Internal Market and Services Michel Barnier, considered by some to be radically pro-competition …”  A green paper is a proposed government policy, in this case something that would be passed by the EU parliament and subsequently in force for companies participating in European capital markets.

Orlik also reports, “Syed Kammal MEP, Conservative shadow lead member in the legal affairs committee, said the revised paper supports ‘flexibility’ and is less drastic than initial proposals that called for mandatory rotation every eight years.”  The changes result from intense lobbying by opponents to the status quo in audit. This opposition, obviously, is mostly from large audit firms and the companies they audit.

With billions of dollars of resources available in large audit firms to fight reform, it is difficult to imagine that any changes will ever be made to the audit model or to the audit function.

Debit and credit – – David Albrecht

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I can speak with unquestionable authority on this issue.  Professors hate grading and assigning grades.  After 32 years in the college classroom, I have to admit that students have been accepting of the grades I’ve assigned.  However, every once in a while some student will come a-complaining.

All professors & instructors can relate to the video, “I Am Worried About My Grade.”  Give a student a lower grade than what the student wants, and you risk having the student march into your office demanding a better grade.  Oh, sometimes it is couched in terms of a request, but the tone of request reveals it is a demand.

I’ve taught at public universities and private colleges, and it seems to me that demanding students are worse at private colleges.  And yes, I’ve even heard, “It’s your fault I received this bad grade.”

I found this video on YouTube.  I did not create it.  It does seem to strike a cord, though.

Debit and credit – –  David Albrecht

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Michelle Golden

Michelle Golden is one of Accounting Today‘s 100 most influential in the American world of accounting.  Focusing on professional service firms (such as CPAs and attorneys), she long has been an expert consultant on marketing.  Early on she saw the value of social media as a tool for professionals to reach new clients and to strengthen relationships with existing clients.  Her book, Social Media Strategies for Professionals and Their Firms: The Guide to Establishing Credibility and Accelerating Relationships, is unusually good.  I own two copies, one for the office, and one for home (I regularly carry one of them with me).

The Maryland Association of CPAs (MACPA), more than any other statae CPA society, has long promoted social media usage by CPAs.

MACPA's use of social media

MACPA members and employees are encouraged to explore all forms of social media and find the one(s) that best fit their needs. Doing so expands our ability to learn and share our own knowledge with others.

Led by Tom Hood and Bill Sheridan, it has an impressive presence on the web 2.0.  A page devoted to its resources is here.  Coincidentally, MACPA was the first society to establish a presence on Second Life.  Long-time readers of The Summa might remember Profalbrecht’s participation in “If I Were an Auditor,” a musical valentine sponsored by MACPA and released in Second Life.

I believe that all CPA firms and accounting professors should seriously consider joining the social media bandwagon, or expanding efforts if already there.  The Internet is omnipresent in the fabric of American life.  Social media simply means interactive Internet.  For CPAs, it means reaching out to current and potential clients where they are, opening up additional channels of communication.  For professors, it means pushing academe away from its array of 19th century practices and into the 21st century.

Recently, Bill Sheridan interviewed Michelle Golden, and on Friday uploaded the video to YouTube.  I’m embedding a link to it for several reasons.  First, it’s about social media use by CPAs.  Second, Michelle Golden should do more of these things.  Well spoken and attractive, she could develop an Internet following that would translate into increased attendance at her speaking engagements.  Third, MACPA could perform a substantial service to the industry by creating a series of these vodcast interviews with the industry’s leading experts.  I would watch them all.

Here’s the interview.  Please watch it.

Debit and credit – – David Albrecht

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Daniel L. Goelzer

Daniel L. Goelzer has been a member of the Public Company Accounting Oversight Board (PCAOB) since its inception in 2002.  His term is expiring in October, 2011, and the SEC is initiating a process that will eventually result in his replacement.

In a letter sent to key regulators and other officials, SEC Chairman Mary Schapiro said:

According to the [Sarbanes-Oxley Act of 2002], two members of the Board must be or have been a CPA.  One of the members that the Commission recently appointed is a CPA.  The term of the other CPA member expires in October, 2011 …

The Act requires that the Board members be “appointed from among prominent individuals of integrity and reputation who have a demonstrated commitment to the interests of investors and the public, and an understanding of the responsibilities for and nature of the financial disclosures required of issuers under the securities laws and the obligations of accountants with respect to the preparation and issuance of audit reports with respect to such disclosures.”

In addition to the requirements of the Act, we consider other desirable experience and related criteria of candidates, including experience that demonstrates a strong understanding of the role of auditors in the Commission’s financial reporting and disclosure system, the ability to be a fair regulator from the viewpoint of all participants in the financial markets, a demonstrated record of independence and the ability to make unpopular decisions when necessary, and the ability and willingness to serve the full term to which appointed.

Names and qualifications should be submitted for consideration by June 17 via email to: Board-recommendations@sec.gov or via mail to: U.S. Securities and Exchange Commission, Office of the Chief Accountant, 100 F Street, NE, Washington, DC 20549, Attn: PCAOB Suggestions.

The official announcement is posted here.  The SEC’s procedures for PCAOB member or chair selection is posted here.

Debit and credit – – David Albrecht

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Don't buy this book.

Just finished reading Velocity: Combining Lean, Six Sigma and the Theory of Constraints to Achieve Breakthrough Performance – A Business Novel, by Dee Jacob, Suzan Bergland and Jeff Cox.

I don’t like this book.  I won’t use it in a class, nor will I recommend that anyone read it.    Pitching a purchased book ($10) into the trash is exceedingly difficult for an accountant, but I might do it to Velocity.

Why did I read the book in the first place?  Bill Ellis (Furman U) said on AECM,

I’ve been assigning Goldratt’s The Goal in my intro managerial accounting classes. Lately I’ve started using … Velocity: Combining Lean, Six Sigma and the Theory of Constraints to Achieve Breakthrough Performance, Dee Jacob, Suzan Bergland, Jeff Cox, for the intro class (business majors) and the cost class (accounting majors).

I’m always looking for ways to move accounting classes into the real world.  My motto is One should be able to do what one knows.  Sounds good, right?  It is more difficult that it appears, as I like to use short snippets of the real world inserted into a college course, a course that covers more than one theme and perhaps many topics.  It is an unaffordable luxury to devote an entire course to one lesson.

One approach is to take classes out into the real world via tours (very superficial) and service learning or internships.  Tours are superficial, and I doubt they are more effective as a good slide show.  Service learning can produce good results, but it is difficult to design short work experiences that lead to significant learning.  Internships aren’t designed to provide a few specific examples of lessons from a specific class.

Another approach would be to bring the real world to the classroom via speakers, readings and simulations.  A novel can hold a student’s attention and teach lessons in the context of real business events.  Although this approach doesn’t generate as much learning, it is efficient with respect to limited time.

I don’t like the book, and I won’t use it for any of my classes.   Velocity has only two good characteristics, which doesn’t make much of a case for purchasing the book.

  1. Quick read.  It doesn’t take long to read Velocity, despite being 300+ pages.  I noticed the small type and minimal spacing between lines, and thought I was in for an ordeal.  I wasn’t.
  2. Realistic depiction of working relationships.  Some of the protagonists liked each other, and were able to work together.  Others didn’t, risking reassignment or termination.  Moreover, I’ve met most of the personality types featured in this book.  Unrealistically, there are no jerks.

There are several reasons not to like Velocity.

  1. No fun.  It simply isn’t entertaining.  Not in the least.  Velocity is as interesting as an Intermediate Accounting textbook.  On second thought, it isn’t.
  2. You call this romance?  A romantic thread was added to the book.  There are two middle-aged people who date, which I doubt would capture the imagination of college students.  The romance is superfluous, and adds hardly any entertainment value to the book.  Mercifully, there is no hugging, kissing, or anything else.
  3. Not educational.  The theme of the book is how to merge lean production, six sigma quality, and the theory of constraints.  In Velocity the characters declare they have done it, but they don’t explain to the readers how this was done.
  4. Predictable plot.  A successful company falls apart over a three year period.  The management team concocts a miracle turn around strategy that produces strong profits within three months.  All live happily ever after.
  5. Unbelievable character.  A key character in the book is a troubled airplane pilot.  He also is the expert in applying the theory of constraints.  It is through his inspired teaching that the management team learns enough how to concoct the miracle strategy that saves the company.
  6. Hawking professional services.  Velocity is written by professionals from AGI-Goldratt Institute, who make their living teaching companies how to implement the theory of constraints into their business.  The book is intended to drum up demand for their consulting business.
  7. No accounting.  Accounting reports are referred to throughout the book.  However, the reports aren’t explained in detail, nor are they presented in exhibits.  Because accounting is important to the story, it should be included in more detail.
  8. Uninteresting food.  Shared meals and exotic food often play a key role in helping a novel seem entertaining.  The prominent dish featured in Velocity is called atomic buffalo turds.  Really.

George Bohan wrote a review of Velocity for the Agile Manufacturing Update blog.  He recommends skipping the first 150 pages.  He’s got a good point.

Debit and credit – – David Albrecht

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My apology to Caleb and JDA.  This post is not my way of auditioning for a GoingConcern gig.  I’m intrigued by two important PCWorld articles, and the end result is my suggesting some accounting related names for a newborn child.

Yesterday, Sarah Jacobsson Purewal wrote, “Baby Named After Facebook ‘Like’ Button,” published on PcWorld.  Not to be outdone, JR Raphael wrote, “10 Tech-Inspired Baby Names Better Than ‘Like’.” According to Purewal,

… Lior and Vardit Adler wanted a unique name for their daughter. The [Israeli] couple reportedly shopped around [for] names–including some Chinese names–but settled on “Like” because they liked the sound of it. They also thought the name sounded “modern and innovative.”

Lior says the name is not a gimmick, and the couple was not paid by Facebook to name their daughter after the popular button

Inspired,  Raphael suggested the following names for geeks to name their precious newborns:  Perl, Mac, Ruby, Linus, Ada, Alice, Json, Page, Pascal, PC.

Not to be outdone, here is my list of baby names for an accountant’s newborn:

  1. Debere.  Italian for debit.  Child can shorten this to Deb or DR.
  2. _WC.  I’m not enamored with a firm that’s been sued so many times, but the initials are priceless.
  3. Chief Accountant.  Recommended for all with  native American ancestry.  I know James Kroeker is trying to turn this into a bad name, but it was admired when LT did it.
  4. Lynn Turner.  LT for short.  Can be used for both daughter or son.
  5. Harold Crick.  The lead character in Stranger than Fiction.
  6. Leo.  If it was good enough for the accountant in The Producers, it is good enough.
  7. ROI.  Pronounced Roy.
  8. Adrienne.   Rocky couldn’t live without her, and neither can most businesses live without accounting.
Debit and credit – – David Albrecht

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For the past two years, my older son has been enrolled in the MBA program of Syracuse University’s Whitman School of Management.  He’s had a profitable time there, learning much and ending up with the job he desired.

On Friday, May 13, I toured the school after attending an awards ceremony and my son’s graduation.

Whitman is a great school, and I’m glad my son went there for his degree.  During the follow-up reception, my son said, “The accounting faculty are gathered on the other side of the cookie table.”  I rushed right over, pausing only briefly to sample the cookies.

Whitman has great accounting faculty (Joseph I. Lubin School of Accounting / Management Information Systems).  They are great in the classroom, and have produced cutting edge academic research.  Some have the good sense to follow AECM discussions and sometimes read The Summa.  My son had the closest working relationships with Kofi Okyere, Joe Comprix and Ginger Wagner.  Moreover, my son now wishes he had majored in accounting instead of finance.  Here is a photo of four accounting faculty members:  Mitch Franklin, Ginger Wagner, Kofi Okyere and Randy Elder.  I could never be a professor at Syracuse, my hair isn’t colorful enough.

L to R: Mitch Franklin, Ginger Franklin, ProfAlbrecht, Kofi Okyere, Randy Elder

Then Joe Comprix, another accounting prof, came over.  Someone remarked that we were wearing the same color and style (blue stripes) of shirt, very accountingish.  I took off my sport coat for the following photo.  Twins, don’t you think?

Joe Comprix and ProfAlbrecht

Thanks for the good time.

Debit and credit – – David Albrecht

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On Wednesday, May 4, I visited the Anderson University (Indiana) Falls School of Business at the invitation of Dean Terry Truitt.  I found an innovative B-school with a mission of serving students in the context of a Christian liberal arts college.

I had a wonderful time, and came away wishing someday I can be a part of something like Falls.  The faculty and students should consider themselves blessed to be a part of it.  There are several reasons why I consider Falls to be special.

First, it is devoted to Christian programming.  All faculty must be prayerful Christians with a sanctified life and active participation in their respective churches.  Why is this important?  Christian behavior, ethics and morals can’t be taught out of a book.  Students must be shown what is right, and have faculty whose primary qualification is a solid Christian life is absolutely essential.

Moreover, today’s business world is a ruthless jungle.  Future business leaders with ethics and morals are needed today more than ever before.  Historically, top corporate business executives have been frequently criticized for rationalizing away proper and admirable behavior in favor of the bottom line.  Middle managers take hits for swallowing their consciouses and sense of right/wrong as they blindly follow the ethics-challenged directives of top corporate management.  I’ve long believed that the key missing ingredient from contemporary B-schools is teaching students how to stand on principle.  This is especially important for accountants and auditors, upon whom society depends for integrity.  Integrity must be nurtured and supported, and if students don’t get it in college it’s unreasonable to expect them to get it in the world of business.  That’s why Falls is a great place to send your college age student.

Second, faculty are active in scholarship, in both application and academe.  Many of the Falls faculty I talked with have had a successful stint in the real world of business, and many continue to consult.  Students benefit greatly from faculty who have been there and are still doing it.  Other faculty are involved in the traditional world of academic research and publishing (Dr. Kent Saunders is the current editor of the Christian Business Academy Review).  The value of this scholarship is proven by the number of Indianapolis business people that enroll in the schools MBA programs.  Falls faculty are credible, respectable, and respected.

Third, the Falls School of Business has a DBA program, designed for faculty teaching at small Christian and private colleges.  This DBA program is not for anyone aspiring for a position at an AACSB school (where more advanced and technical scholarship is required), but it is adequate for service in small colleges (many with ACBSP and IACBE accreditation).

I wish the very best for the Falls School of Business.  It was especially nice to see my friend, accounting professor Cindy Peck.

Faculty and staff of the Anderson University Falls School of Business

Debit and credit – – David Albrecht

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In my 32 years in the collegiate classroom, attending graduation ceremonies has never been high on my list of things to do.  I missed all three of mine.  They were scheduled on Saturday, and I observe the Saturday Sabbath, when working is a “Thou shalt not.”  In my years at Iowa, Virginia Tech, North Carolina-Chapel Hill and Bowling Green State, I didn’t attend because of the work-Sabbath conflict. Then I moved to Concordia  College (Moorhead, MN) and found that I had not the proper clothes to wear to its Sunday graduation ceremony.

It’s called academic regalia, and professors go all out.  Style has an important part to play, so does trying to one-up the other professors down the hall.  This year I borrowed a set of plain regalia and I surely felt out of place.  Professors were wearing gowns of every conceivable color.  Hoods can be colorful, too.  Tams are in, mortar board caps are out.  Gold tassles are absolutely de rigueur.  This stock photo of doctoral gowns does not capture the bright, colorful diversity out there.

This year I’m so glad I attended on May 1.   My first group of Concordia students graduated, and I am proud of every one.  Concordia seems to excel at putting on a graduation ceremony.  The floor of the athletic arena was sectioned into thirds.  Professors filed in, led by old-timers with much experience.  They took the front of the middle section.  Then the students filed in, lines left and right filling the sides symmetrically.  Proud parents and friends filled the seats on either side.  Here’s what it looked like.

After a speech by one of Minnesota’s senators, the task of reading off several hundred names commenced.  Here’s a photo of the college president handing out diploma cases.

Two days earlier, while I was proctoring my last final exam on Friday at noon, my younger son Chris was marching in his own graduation ceremony at the University of Michigan.  He received two masters degrees in music.  He is pictured afterward beside his proud mother.  A trumpeter, his graduate brass quintet played at graduation.

Chris Albrecht's pink hood signifies a degree in music.

Fast forward two weeks to today.  My older son Tom is graduating from Syracuse University with an MBA degree, specializing in finance and healthcare.  He says he should have majored in accounting.  I knew that all along, of course.  His graduation ceremony was scheduled for a Saturday.  The graduate dean of the Whitman School of Management, is pictured here handing Tom his diploma case on Friday in a ceremony for one.

Tom Albrecht's (center) brown hood signifies a degree in business.

Three graduations and they all were special.

Debit and credit – – David Albrecht

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