Archive for June, 2012

Accounting Today does a lot of things really well, and has for a long time.  I’m adding using its Facebook page to the list.  It is now in the midst of its first contest for Accountant of the Month.  To qualify, you must be the opposite of boring.  As I am uber boring, and aspire to ascend to the level of dull, I shouldn’t enter.  But who knows?  This might be your thing.

First, we’ll take a look at the art:

There are two links to bookmark:

The prizes are cool.  If you win, Accounting Today will give you 15 seconds of fame, a cool caricature, a T-shirt, and free entry to a conference.

I really want the caricature.  What do you think?  Am I cool enough to enter and win the contest some month?

Voting for June’s entries is open until June 26, 2012, and voting has begun.  You will find among the entries:

I’m not going to vote for any of the men dressed in business attire and hawking their professional services.  They are dull and boring.

Vote from the contest page.

Debit and credit – – David Albrecht

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Who has better footwork, Rita Hayworth or a world champion soccer player?  Probably Rita.

The following clip has nothing to do with accounting or soccer.  Ellen from Germany pieced together clips of a dancing Rita Hayworth with BeeGees disco classic:  Stayin Alive.  The reult is amazing.

Just wondering.  Does your accounting or social media firm do anything this cool?

Thanks to David Fordham (JMU) for the tip.

Debit and credit – – David Albrecht

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Deloitte Australia has issued Social Media Report 2012.

Bruce Kneuer told me about it.  Mr. Kneuer lives in Laconia, New Hampshire, and works as a social media manager at Kenexa.  We had never met, and until a few minutes ago we didn’t know the other existed.

He posted a link to Deloitte’s report on a LinkedIn group–Social Media in Organizations (SMinOrgs)–to which I am a member.  I clicked on the link and read the report.

Then I got back to Mr. Kneuer about it, “[I] wonder how you, with no obvious connection to Deloitte, came to post it on this list.”

He replied, “My work involves watching for and reviewing (albeit quickly) efforts that involve the intersection of Social Technology and Human Resources/Human Capital Management. I often contribute such findings to this group and others.”

We both made comments about the report and then our interaction ended.

And that’s how it goes out in the world of social media.  Two professionals briefly interact to the benefit of both.

Financial professionals (including accountants) and their employing organizations should use social media.  Leave aside for the moment the use of social media for marketing.  Social media usage can help financial professionals and their employing organizations better perform their work.

I use social media constantly throughout the day.  It is integrated to such a degree that I no longer recognize that I’m using it.  It is simply a tool, like my laptop, e-mail and  Office.  To show how much I rely upon it, last year someone put me on a list of the top 50 most social media savvy professors in America.

It is no secret, however, that many financial professionals lag far behind.  At the firm level, the task of social media marketing is outsourced to someone outside the firm.  And many professionals don’t use social media at all.

That’s why I jerked to attention when I was notified of the Deloitte Social Media Report 2012.  That the report exists at all is a big deal!

I eagerly read the report, hoping to use Deloitte as an important example in my future presentations.  What a let down. There is as little content in the report as there is in a Deloitte audit opinion.  Never-the-less, there is a report.  Let’s take a look.

Social Media Report 2012
Celebrating how our communities connect and share online

Deloitte showcases how it uses social media through the eclectic and authentic voices of our people. In this visual Social Media Report 2012 we show how we use social media internally to share, seek advice, problem solve, socialise, and post ideas. Externally our recruiters have changed the game through Facebook and YouTube. And we use Linkedin and Twitter for business.

This report captures our collective sense of excitement as well as the hard business value social media offers. It covers game changers, governance, collaboration, business and what’s next.

The first quotation, by the CEO of Deloitte Australia–is powerful:

When I first heard about social media, I thought it was a thing best avoided.  I’m really pleased that I’ve gotten to understand the power of this medium.  Although it’s complex, fast changing and full of risks the rewards are unbelievable.  Without social media you’re just not going to communicate with your younger team members.  So my advice is this—–you can’t ignore it.  Join in.  Giam Swiegers, Chief Executive Officer, Deloitte Australia.

Congratulations Mr. Swiegers and Deloitte Australia.  I wish you many happy social media encounters.

Debit and credit – – David Albrecht

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Shyam Sunder is James L. Frank Professor of Accounting, Economics, and Finance at Yale School of Management in New Haven, Connecticut.  He has long opposed a single set of global accounting standards.  So to has Stella Fearnley, professor of accounting at Bournemouth University, Bournemouth, United Kingdom.

Their recent op-ed piece, “Global Accounting Rules — An Unfeasible Aim,” appeared in the June 3, 2012 edition of the Financial Times.  I have asked for, and been granted, permission to republish it here.

Global Accounting Rules
– An Unfeasible Aim

By Stella Fearnley and Shyam Sunder

The introduction of the euro and the adoption of International Financial Reporting Standards (IFRS) in the EU and other countries were promoted by aspirational rhetoric about gains from uniformity. Applying uniform process or rule in diverse societies does not yield uniform outcomes. Effective oversight and control of the process and rule-making can become impossible and unbalanced with so many players involved. Failure to recognise and manage the risks associated with uniformity has driven the European Monetary Union to a critical precipice. Similar risks apply to the efforts of the International Accounting Standards Board (IASB), the accountancy profession and some international regulators to bring about adoption of IFRS for global use.

The IASB and US Financial Accounting Standards Board have committed significant resources since 2002 trying to agree on common accounting standards. Despite their efforts, IFRS have not been approved by the Securities and Exchange Commission for US adoption. The SEC may never risk the political backlash from ceding control of its accounting to a non-US body. We can learn from the euro debacle and assess not only if the vision of one set of global accounting standards is achievable but also if it is desirable.

Accounting standards interact with law, commercial codes, and social norms in different countries in many ways. The IASB has pushed its agenda ahead taking no responsibility for recurrent unintended consequences. The disaster of some banks depleting their capital by paying bonuses and dividends out of false profits, generated under IFRS’s defective mark-to-market and loan-loss provision standards, is a good example.

Abandonment of judgmental true-and-fair standards in favour of written rules make accounting vulnerable to mis-statements through complexity beyond the grasp of users and directors.

China, Japan, and India have yet to be persuaded to adopt IFRS and watch from the sidelines. Within Europe, some countries view IFRS as an Anglo-American invention, and remain sceptical of its suitability for their own needs.

Complexity and interactivity of social systems and markets make it all but impossible for a group of experts to divine the “best” accounting solution that will serve divergent economies. Even if it were feasible, it can only be developed through bottom-up evolution of accounting and not through top-down imposition of a single method selected by a board of “experts” with limited accountability.

The IASB’s persistent denial that the procyclical and complex accounting model played a part in the banking crisis by inflating profits undermines trust in its competence and intent.

The euro debacle points to prudent wariness of Icarus-like overreaching ambition that is not underpinned in theory or experience. Common standards, such as common currency, may appear a good idea, particularly for international companies, regulators and audit firms. But what did we get? A Board that issues standards that can induce false profits in reports and drown users in complexity; that has not accepted responsibility for the dysfunctional consequences of its standards; and has no effective mechanisms for timely correction of defects.

Although the big players get economies of scale from applying IFRS across their international activities, shareholders and other stakeholders, particularly in the banking sector, have not been well served by the outcomes of IFRS standards.

We therefore urge the SEC not to proceed with IFRS in the US. Directors and auditors in the EU and other countries applying IFRS could lead by insisting on a true-and-fair override to cut complexity in IFRS based accounts.

We suggest the G20 drop its support for global accounting standards. Instead, they could recommend that accounting reports reflect the economic substance of businesses based on professional judgments and sound, prudent principles, and recognise that Anglo-American based accounting standards are not necessarily appropriate for the whole world.

Debit and credit – – David Albrecht

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Professor Annette Nellen (J.D., CPA) is Director of the MST Program at the San Jose State University Lucas Graduate School of Business, and Professor in the Department of Accounting and Finance at the San Jose State College of Business.  She is a leading expert in the field of taxation.  She also blogs at 21st Century Taxation.

Today, she sends notice of a new issue in The Contemporary Tax Journal.

I am very pleased to announce the release of the Spring 2012 issue of The Contemporary Tax Journal, a publication of the San Jose State MST program.  I hope you enjoy this issue.

I am very proud of this activity. Fifteen MST students wrote articles for the journal and two classes were also involved in the Tax Policy Analyses content. Ten students attended the November 2011 Tax Institute as guests (compliments of the SJSU Tax Advisory Board and the attendees) and wrote summaries of the presentations that are in this journal. We also have two paid students working with Professor Bobbi Makani on the organization. (I continue to be the webmaster and final technical reviewer.)

This type of activity should be much more common at collegiate accounting, tax, and business programs.  Such a student publication is a terrific way for students to seal the learning that has taken place in their courses.  Through writing articles, they are put in position to figure out what they know and to make a choice as to whether they believe in it or not.  Moreover, knowing that it will be read by outsiders disciplines all involved to produce a professional grade publication.

Professor Nellen, thanks for sending me this announcement.

Here is the table of contents for the Spring 2012 issue of  The Contemporary Tax Journal.

Debit and credit – – David Albrecht

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In other parts of the world, large accounting firms took heat for giving clean audit opinions to banks that were floundering or dying.  In Spain, though …

Julien Toyer (Reuters) reports in a news brief (published on IBNLive and Yahoo Finance) Spain’s government is hiring all of the Big 4 audit firms to conduct a review of distressed Spanish Banks:

MADRID (Reuters) – Spain has picked the ‘Big Four’ accounting firms KPMG, PwC, Deloitte and Ernst & Young to carry a full, individual audit of its ailing banks, a source with knowledge of the decision told Reuters on Saturday. The review, which should take a few months, will complement an ongoing exercise to stress test Spains banking sector by consultors Oliver Wyman and Roland Berger, whose first results are expected around mid-June. ‘I can confirm (the names),’ the source said.

Mr. Toyer said that the source did not specify from which country the auditors would come.  ABC.es reports that the audit reports are due by July 31.

I wonder if the eventual reports to the Spanish government will differ from previously issued audit opinions.

Debit and credit – – David Albrecht

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When my second birthday arrived, accounting genes helped me realize my age had doubled in one year.

Age doubling seemed like a good idea at the time, because I had my drivers license on my fifth birthday (1 2 4 8 16).  Today, though, I’m 4,611,686,018,427,387,904.

Bob Jensen (AECMer and retired from Trinity U) doesn’t like to admit to it, but the last time his wife baked him a birthday cake, neighbors alerted the fire department (picture on right).

Despite breaking a few eggs along the way, it’s a happy day when an accountant can add another year to the ledger.  This post is dedicated to all accountants who have a birthday during 2012.

For other birthday sentiments, please read, “When a Boomer Accountant Has a Birthday.”

Debit and credit – – David Albrecht

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

Dan Ariely earns the lead spot in this week’s Miscellany.  In an essay published in last Friday’s Wall Street Journal, he explains, “Why We Lie.”

I’ve been refining my thoughts on financial psychopathy, and Ariely’s research is consistent with my emerging theory.

Jim Peterson of re:Balance delivers bad news in, “Inaction Prevails Again — The European Parliament Defers on the Auditors.”

I’ve written time and time again about how the audit model is fatally flawed.  Auditor opinions provide almost no information and almost no protection to investors seeking credible financial information upon which to base their decisions.

I got my hopes up when Michael Barnier came upon the scene and introduced proposals that for the first time in decades had a chance of improving audits.  I knew it was a long shot, but what the heck?

It looks like big audit will win again, which means that investors will lose again.

Kevin Slavin is a physicist who works as a Wall Street quant.  Quants develop mathematical and computer models for high volume stock trading.

His TED Talk is mesmerizing.

Paul Barnwell has been there, done that, and apparently won’t do it again.  His essay at Education Week Teacher reveals a different perspective in, “Why Twitter and Facebook Are Not Good Instructional Tools.”

OnlineCollege.org has a nice story, “15 Flipped Classrooms We Can Learn From.”

Debit and credit – – David Albrecht

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In early May, one of the concurrent sessions I attended at the American Accounting Association Ohio Region Conference was “Using Video Podcasts and Other Technology to Provide Instruction Outside the Classroom.”  It featured David Randolph and Wendy Tietz.

The session was divided into two 45 minute presentations that revolved around flipping the classroom.  I last wrote about flipping the classroom on January 6, 2012, in, “Turning the Accounting Classroom Upside Down.”

David Randolph, Xavier

David Randolph (Xavier U) made the first presentation.  He first reviewed, “Flipped’ classrooms take advantage of technology,” a USA Today article on flipping the classroom.  He then reflected on his flipping experience at Xavier.


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