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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Yesterday a story broke about eleven Secret Service agents hiring prostitutes in Columbia.  Today, Forbes contributor Robert W. Wood writes, “When Prostitutes Service Secret Service Are They Tax Deductible?”   Good question.

Are the agents using their per diem to finance the activity?  Reimbursable expense?  If using per diem, should the reallocation for prostitute fees need to be reported as additional income?

Eleven agents? Were there eleven women?  Did they need to rent a bus or a couple of vans?  Does use of a government van require being reported as additional income?  Does use of a government supplied hotel room require being reported as additional income?

This brings back memories of so many SEC employees and their pornography viewing habits while on the job. Has the Secret Service outdone the SEC?

Debit and credit –  – David Albrecht

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The American Accounting Association (AAA) is the professional organization for accounting professors.  I have been a member for nearly 25 years.  The two main activities of the AAA are to hold membership meetings and to publish journals.

I especially enjoy AAA regional meetings, and my favorite is put on by the Ohio Region.  My favorite memory is from years ago when Ed Conrad (U Akron) led a discussion on humor.  He’s a funny guy.

Thomas Calderon (U Akron) says, “Attending the Ohio Region AAA meeting is always a highly beneficial experience. Attendees can expect exceptional panel sessions, outstanding paper presentations, and superb networking opportunities with academic colleagues and leaders in the profession.

Jerry Weinstein (James Carroll U) says, “The Ohio meeting provides a great opportunity to network with in-state colleagues and stay on top of trends in the region. The paper, panel and plenary sessions cover a broad gamut of topics but most of them have a focus on the art of being an educator so attendees receive great value.

This year, the Ohio AAA regional conference is held in the Cincinnati metropolitan area (Covington, KY), May 10 through May 12.  The local organizers are Wally Wood (U Cincinnati), Ohio Regional president, and Akhilesh Chandra (U Akron), Program Chair.  Tracey Sutherland, executive director of the AAA, will also be there.

The program for the 2012 conference is on-line.  There are a few highlights worth noting.

The conference starts with $45 CPE workshops on Thursday afternoon.  The premier workshop is “Building Resilience, Well-Being, and Mastery into Your Life,” by Marsha Huber, PhD, CPA, Masters of Applied Positive Psychology.  Marsha is a long-time faculty member at Otterbein, but now is at Youngstown State.  Marsha Huber is a well-published researcher who brings her knowledge of applied psychology and social networks to the field of accounting.  She has presented dozens of workshops, and has won several awards for her presentations.

I most definitely would be attending her workshop if I wasn’t already on the program to present a workshop at the same time.  My workshop is titled, “Social Media in the Classroom.”

Friday starts with two plenary sessions that promise to be interesting and provocative.   J. Clarke Price, CEO of the Ohio Society of CPAs, provides his annual, “State of the Accounting Profession.”  This is followed by a panel discussion led by Thomas Calderon (U Akron), “Looking Through the Crystal Ball: Views of Managing Partners from Accounting Firms on the Future of the Accounting Profession.”  Large firm panelists are, Susan McPartlin (Office Managing Partner, PriceWaterhouseCoopers LLP, Cincinnati), Robert Taylor (Office Managing Partner Grant Thornton LLP, Cincinnati), and Craig Marshall (Office Managing Partner, Ernst & Young, Columbus).

Following these are panel discussions and presentations of research papers.  Timothy Fogarty (Case Western Reserve U) has four papers on the program this year.

Check here for registration information.

I hope to see you there.

Debit and credit –  – David Albrecht

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Jack Tramiel has passed away at age 83.  He is famous for founding the company that produced the VIC-20 and Commodore 64.  The C-64 is the computer that sparked my interest in the use of computers in the classroom.  I am tremendously grateful or his creations.

Tramiel founded Commodore International in 1978.  He produced inexpensive computers.  The first one I bought in 1982 was the VIC-20.  Folks familiar with today’s computers and their gigs of RAM will find it difficult to believe that the VIC-20 had only 5K of RAM.

The VIC-20 accepted programs written in the BASIC programming language.  This was a relief, as I still had nightmares of writing assembler-level programs as an undergrad.  As an undergrad, computer programs were entered on punched cards for mainframe batch processing.  Programming on the VIC-20 was different.  Programs could be entered directly into RAM, without using punched cards.  I would type in a short game or other program published in a magazine, then spend hours playing it.  I remember a program called the Worm of Bemer, but don’t remember if that was a VIC-20 or C-64 program.  There also was the summer Olympics program, produced by Epyx.

The Commodore 64 program had 64K of RAM, and I purchased mine in 1983.  Programs could be more sophisticated.  The programs I used the most were a word-processor and a spreadsheet program.

At the time I was teaching at Andrews University, a Seventh-day Adventist school in Michigan.  The school purchased a few C-64 machines for its first computer lab.  I had students crunch numbers on them for a budgeting project.

When I entered the Virginia Tech accounting doctoral program in 1985, I wrote my papers on the C-64 and printed them on an electronic typewriter.  While others in the doctoral program wrote papers by hand, then typed them out on an electric typewriter (one’s spouse typed out his papers), I was high tech with my C-64.  I couldn’t have passed through the doctoral program without it.

Jack, I appreciate the work of your life.

Debit and credit –  – David Albrecht

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I like infographics, if done well.  Moxy has one out that is done well.

Infographics is a new word, and I couldn’t find it in any online dictionary.  But I found it on Wikipedia:

Information graphics or infographics are graphic visual representations of information, data or knowledge. These graphics present complex information quickly and clearly, such as in signs, maps, journalism, technical writing, and education. With an information graphic, computer scientists, mathematicians, and statisticians develop and communicate concepts using a single symbol to process information.

An infographic is a form of data visualization, I imagine.  Data visualization is a topic I’ve written about, here, here and here.  One of my favorite infographics is the daily USAToday weather map.

Moxy has an infographic out on proxy season.  A proxy season is the period of time between when a proxy is registered (filed with the SEC) and the annual shareholders meeting.  I’ve snipped a revealing part of the infographic.  Click on the snippet to be taken to the original infographic at Moxy.

Thanks, Moxy.

Debit and credit – – David Albrecht

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It’s the first weekend in April, and the Augusta National Golf Club us hosting the Masters Golf Tournament.

This years, there is substantial interest in Augusta National membership.  It is a private golf club with an exclusive membership.  It did not admit its first member of African descent until 1990, and it has yet to admit its first woman.  National political leaders such as President Barak Obama, Mitt Romney and Newt Tingerich believe it is time for open its membership.

In this short clip, Augusta National charman Billy Payne is tight lipped in answering media questions about its membership.

I’d like to point out that Augusta National does not admit accountants as members. It is high time.

Accountants are key members of both society and the economy.  Moreover, accountants and their firms wield significant influence in the world of business.  It is time for Augusta National to end its discrimination against accountants.

For further information, visit the web site for Accountants Love Augusta National Golf Club, at http://accountantswouldlovetojointaugustanational.com.

Debit and credit –  – David Albrecht

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