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Posts Tagged ‘Earnings management’

[April 1, 2013 Special Edition]  Corporate leaders from across the country today gathered on Wall Street for the first ever display of business support for honest financial statements.

Ruta Crumwell led off with an emotional call for death to all who betray the public trust.

CFOs then marched en masse to a traders pit, sawed off their pinocchio length noses, and lit a bonfire visible at the SEC.

Richard Foldover, beloved leader of defunct Lehman Sisters and the featured speaker at the event, then spoke at length on the evil of Repo 105.

The evening ended with auditors wiping up with clean audit opinions.

Debit and credit – – David Albrecht

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Am I going overboard?  I hope not, hate getting wet.  Let’s see what Dennis Beresford, former chairman of the FASB and current accounting professor, has to say about my previous post.  Denny is quoted from AECM, the international listserv for accounting professors.  On Thursday, November 27, 2008, he says:

Dennis Beresford, former Chairman of FASB, now accounting professor at University of Georgia

Dennis Beresford, former Chairman of FASB, now accounting professor at University of Georgia

Last year I had Julie Erhardt speak to my graduate accounting classes and meet with some of our accounting faculty. Julie is the SEC Deputy Chief Accountant in charge of all of the international accounting effort. One of the faculty members asked about how we could teach IFRS on top of U.S. GAAP. Julie gave what I thought was a very interesting and insightful response.

Julie said that perhaps we could change our approach to financial accounting to one in which most of the focus in the first place was on business issues.  For example, if covering lease accounting, the instruction could begin with the differences between buying and leasing an asset, what are the economics of doing one vs. the other, and what would be the effects on financial statements of capitalizing leases vs. expensing lease payments as they are incurred.  Then the coverage could move on to the fundamental principles that determine whether leases should be capitalized or not e.g., how much of the fair value is covered by lease payments. Only after the economic issues and the basic principles are covered would some of the details (e.g., what to do with contingent rentals) that distinguish IFRS from GAAP be mentioned. In this approach, about 50% of the effort would be on the economics, 25% would be on the principles (that ought be to pretty similar), and 25% on the rules (that could be different).

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