Archive for April, 2012

Robert Herz

I have confirmed with Professor Emeritus Daniel L. Jensen, Chair of the Accounting Hall of Fame Committee, that Robert H. Herz has been selected for induction into the Accounting Hall of Fame.

Robert Herz was chair of the Financial Accounting Standards Board (FASB) from 2002-2010.  Prior to that he served part-time on the International Accounting Standards Committee (IASC), and was a partner at PriceWaterhouseCoopers (PWC).

The induction probably will take place in Washington, D.C., in August at the annual meeting of the American Accounting Association.

An official press release is forthcoming later this week.  I have asked Mr. Herz for a comment.

Dennis R. Beresford, former Chair of the FASB and current professor at U of Georgia Terry School of Business, has this to say:

Bob Herz is the first person who has served on both the IASB and FASB. He served with great distinction as FASB Chairman for over eight years during some very challenging times for the Board. Probably his greatest contribution was his untiring work to converge accounting standards worldwide while not sacrificing the high quality of U.S. standards in the bargain. Bob continues to serve the profession as an Executive in Residence at Columbia University, a member of the board of directors and audit committee of Fannie Mae, a member of the PCAOB Standing Advisory Group, and in many other capacities. And he continues to speak to numerous academic and other audiences on important accounting issues of the day. In short, I think he’s clearly a terrific choice for the Accounting Hall of Fame!

Stay tuned.

Debit and credit – – David Albrecht

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Intermediate Accounting students from Concordia College threw an end of the year party earlier tonight. The class social committee (Ian and Rachel) chose Buffalo Wild Wings as the host establishment.

The theme of the party was to say goodbye to ProfAlbrecht, who is leaving Concordia College at the end of the school year.  The adding machine cake was baked by Barb Torgerson of Classic Cakes & Catering.  It tasted as good as it looks.

Good luck, Prof. Albrecht. We’ll miss you.

I’m not sure exactly why my students chose to make the effort, but I’m glad they did.  In this world, there are far too many instances when we have an opportunity to say thanks, but don’t take it.  My Intermediate Accounting students are good people, and with this party reminded me of the positive impact that good people can have.

It has been my privilege to have been a teacher to Concordia College students in general, and to this group of Intermediate Accounting students in particular.  As so often is the case, the teaching has gone in both directions.  I’ll share a few memories of lessons learned from this group of students.

It is easy for a professor to ask questions of the class at large.  The students who “get it” respond with a good answer, and the professor can feel good that someone benefited from the teaching efforts.  This group of students, though, really appreciated it when we would go around the classroom and each (and every) student would have to answer a question when it was his/her turn.  By this, the class reminded me that education isn’t just for the smartest students, but for all the students.  I was impressed with how students weren’t embarrassed by making errors.  The end product, for them, was the lesson eventually learned.

One memorable aspect of the two semester class was when two of the students were unable to continue from fall semester to spring because of schedule conflicts.  I offered to teach the two during the evening, in a class section of two.  They accepted, and by so doing gave me a chance to relearn and recommit to what education is all about.  Both told me that they weren’t looking for a guided independent study, where the focus would be on the material.  They wanted a regular class where the focus would be on process, logic and thinking.  Moreover, I was to do this with no tangible reward, the class was “off the books.”  It was only about them being two students in need of learning, and I could help make that happen.  A few other students eventually joined the two, and we all had a special time.  The informality of the class gave me an opportunity to observe how the students worked together to learn the material.  Learning, for them, was not always a solo experience.  It also reminded me of the value of friendship and camaraderie.

And, I need to say thanks to the two, for each bought me a meal in appreciation.

Dividing the class gave me a chance to tailor the classroom experience to the needs and desires of the individual students in each group.  And that was cool.

As the year progressed, they persuaded me that they could do better on tests if they used their laptops, just like a regular class when they used MS Excel to take notes.  In turn,  I gave the students the flexibility of scheduling their tests at favorable times for them.  Not everyone had to take the test at the same time.

At the party, students could earn extra credit if they took a second piece of cake.

Hey, gang. I will miss you.  I enjoyed the party. We’ll have to do it again, sometime.

Debit and credit – – David Albrecht

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Now I’ve seen everything.

I’m quoting from the Minneapolis StarTribune and the Shakopee (MN) Patch.  On April 25, 2012, Paul Walsh reports in “Business teacher’s boss sticks up for him in fraud sentencing; he’s fired anyway,” and Lisa Baumann reports in, “Accounting Chair at Minnesota School of Business-Shakopee Sentenced for Fraud,” that Joseph W. Traxler (64) has been sentenced to a five year prison term after pleading guilty to committing an $8 million fraud.  He was also ordered to pay more than $5 million in restitution.

After leaving the company where he committed the fraud, in 2009 Traxler moved on to the Minnesota School of Business in Shakopee, where he became accounting department chair.  He started a forensic accounting program at the school, and was teaching the fraud course.  By doing so, he disproved the old adage, ‘those who can’t do, teach’.  He not only could do, but he was popular and considered a very good teacher.

Quoting from Baumann:

Minnesota School of Business (MSB)-Shakopee’s accounting department chair was sentenced Tuesday to five years in prison for his role in defrauding banks to the tune of roughtly $8 million …

Joseph W. Traxler, 64, was senior vice president and chief financial officer for the Centennial Mortgage and Funding Inc. mortgage company in Bloomington in 2007 and 2008. Traxler, of Bloomington, was sentenced in federal court in Minneapolis.

Although Minnesota School of Business-Shakopee officials declined to comment to Patch on the matter Wednesday morning, MSB officials issued a statement later in the day saying Traxler was terminated on Wednesday.

He had joined the staff of MSB-Shakopee in 2009 and had been teaching classes, including one on fraud. Under Traxler’s direction, the school began offering a Forensic Accounting Program in January – designed to provide students with the knowledge, technical skills and professional habits to pursue a career helping businesses detect and prevent fraud.

It is no secret that many in business are challenged ethically and legally.  If anything, business professors are much less ethical than the typical business professional.  I’ve seen some auditing profs who were real stinkers.

I should add that for me, it is important to live an honorable life.  I recognize that many choose to live a life with occasional dishonor.  Education is about the student, not about the professor.  I have seen far too many professor colleagues who either have forgotten this, or never learned it.

Debit and credit – – David Albrecht

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Anton Valukas is a Chicago attorney who as alternated stints as a federal attorney with the Justice Department prosecuting white collar criminals, with a law practice defending white collar criminals.  He is well known for serving as court appointed bankruptcy examiner in the bankruptcy of Lehman Brothers.  After an 18 month investigation, his team published a nine volume, 2200 page report.

Valukas carefully documents how Lehman Brothers engaged in Repo 105 & 108 transactions to improve the appearance of the company’s liquidity on its balance sheets.  Valukas concludes that there are reasonable grounds for the government to purse litigation against Lehman Brothers executives.  The State of New York has already filed a civil fraud lawsuit against Ernst & Young for its part in what is alleged as accounting fraud.

On Sunday, April 22, 2012,  Steve Kroft interviewed Valukas on the popular CBS show, 60 Minutes. The following clip from the interview is a CBS teaser or advertisement for the show.

In the short clip, Valukas says the only reason for Lehman Brothers to engage in Repo 105 transactions was to impact the leverage numbers on the company’s balance sheet.

The entire 60 Minutes segment, “The Case Against Lehman Brothers,” can be viewed by clicking on the following link:


The transcript of the segment is available at the 60 Minutes site.

A key exchange between Kroft and Valukas is,

Steve Kroft: Did these quarterly reports represent to investors a fair, accurate picture of the company’s financial condition?

Anton Valukas: In our opinion, they did not.

Steve Kroft: And isn’t that against the law?

Anton Valukas: It certainly, in our opinion, was against civil law if you will. There were colorable claims that this was a fraud, yes.

By colorable claims Valukus means there is sufficient evidence for the Justice Department or the Securities and Exchange Commission to bring charges against top Lehman executives, including CEO Richard Fuld, for overseeing and certifying misleading financial statements, and against Lehman’s accountant, Ernst and Young, for failing to challenge Lehman’s numbers.

Anton Valukas: They’d fudged the numbers.

At the end of the segment, Kroft speculates that the reason the SEC has not filed any suits is because it does not have a winnable case, given that it had personnel on premise3s at Lehman, and these personnel were aware that Repo transactions were going on.  Valukis wonders if the personnel had the expertise to fully comprehend what was going on.

Debit and credit- – David Albrecht

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IFRS.  IFRS.  I do not like thee, IFRS.


The debate over U.S. adoption of IFRS (International Financial Reporting Standards) has died down in recent months.  This is due to three reasons, I think.  First, the FASB and the IASB have declared that further progress toward convergence is no longer possible.  The respective board members simply see the world differently and have come to different conclusions about the composition of specific accounting rules.  In other words, no compromise is possible.

Second, many (including ProfAlbrecht) believe that upon the reelection of President Obama in November, 2012, the Securities and Exchange Commission will be directed to announce the abandonment of U.S. GAAP and the adoption of IFRS.

Third, Europe and America are side-tracked by the issue of possibly mandating auditor rotation.

Tom Selling.

But that hasn’t stopped my good friend Tom Selling of the Accounting Onion from continuing the good fight. On April 2, 2012, Selling posted an insightful and well researched piece, “Ten Claims in Support of IFRS Adoption by the SEC – and Why They are False.” So impressed with this essay, I am tempted to copy it, strike out Selling’s name and replace it with mine, and submit it to two or three leading journals.

Selling is eminently qualified to write this essay.  One of the seven experts on IFRS summarized in The Summa, there is no financial accounting author more widely respected today.

You should read Selling’s masterpiece.  But if you don’t want to take the time (it a pretty long essay), here is my summarization of the major points in “Ten Claims in Support of IFRS Adoption by the SEC — and Why They are False.”


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On Thursday at lunch with fellow professors at Concordia (journalism and accounting), the topic turned to whether an aspiring business journalism should study journalism or business.  I asked if the journalism curriculum included a study of famous or popular journalists.

The journalism prof responded, “No, we just teach students to write.”

My first thought was to wonder if that is reasonable.  Shouldn’t a study of great journalists be an essential component of any aspiring journalist’s education? The benefit, I suppose, would be to provide examples of journalists for students to pattern themselves after.

My second though was to wonder if I am like this journalism prof.  Am I limited to teaching students how to account?  Or do I hold up great accountants for students to learn from?  Great accountants can serve as role models.


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David Letterman gathered his core group of New York area accountants for another Top 10 list, “Top 10 Signs Your Accountant is so Dumb.”  The segment aired on Friday, April 13, 2012.  I’ve been posting these clips for years, and in my opinion this is the best yet.

Thanks to Mark Holtzman (Freaking Accountant) for the tip.

Debit and credit –  – David Albrecht

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