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Posts Tagged ‘IFRS opponent’

Influential accounting news and commentary blog, Going Concern, is airing a series of interviews with key figures in the IFRS debate.  The second installment of the series, published April 1, 2010, features me.  Click on, “Professor David Albrecht: IFRS Will Make Financial Statement Comparison an Impossibility,” to read the interview.

Many thanks to the team at Going Concern (Caleb Newquist, managing editor) for thinking of me, and to ace reporter Adrienne Gonzalez (aka Junior Deputy Accountant) for the fine write-up.

Debit and credit – – David Albrecht

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A panel discussion titled, ” Concerns Over U.S. Adoption of IFRS” will take place on Monday, Monday August 2, 2010 – 10:15 am-11:45 am at the annual meeting in San Francisco for the American Accounting Association (AAA).  The AAA is the primary professional organization for American accounting professors.

The panel discussion will feature internationally renowned accounting experts who have expressed concerns over some aspects of U.S. adoption of IFRS.  Tentatively scheduled participants are Ray Ball (University of Chicago), Shyam Sunder (Yale University), Charles Niemeier (PCAOB), Robert Jensen (Trinity University, retired), David Albrecht (Concordia College).  The session is moderated by David Albrecht (Concordia College).

The American Accounting Association’s 2010 Annual Meeting will be held in the Hilton San Francisco Union Square and the Parc 55 San Francisco in San Francisco, California, July 31 – August 4, 2010.  Registration for the annual meeting is required to attend this panel discussion.

Debit and credit – – David Albrecht

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J. Edward Ketz is my round tuit.  ???  A round tuit is anything that unlocks your sense of inertia, allowing you to start working on some task that has been delayed far too long.

An example helps.  Have you, like me, ever been nailed for procrastinating?  All the time.  It probably followed this thought, “I’ll get a round tuit when there’s a free moment.”  But everything else doesn’t get done and there’s no free time, so you never get a round to it.

Ed is my round tuit.

On February 25, 2010, the Securities and Exchange Commission (SEC) released a formal Commission Statement in Support of Convergence and Global Accounting Standards.

I never got around to reacting.  Yesterday (March 29, 2010), Ed Ketz published his reaction, “The Iffiness of IFRS“.  It’s better than anything I can  write (anything Ed writes is always better than anything I can ever write, just take it for truth).  Better late than ever, here are my personal reactions.

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On February 25, 2010, the Securities and Exchange Commission (SEC) released a formal Commission Statement in Support of Convergence and Global Accounting Standards.

I never got around to reacting.  Today (March 29, 2010), Ed Ketz publishes his reaction, “The Iffiness of IFRS” at SmartPros.   It’s better than anything I can write (anything Ed writes is always going to be better than anything I can ever write, just take it for truth).  For those of you new to The Summa, Professor Ketz is a charter member of the group of IFRS critics.

For years, Ketz has railed (Merriam-Webster: to revile or scold in harsh, insolent, or abusive language) at the corporate practice of financial reporting.  He has repeatedly said that the number one problem is that corporations simply don’t follow the rules.  If ever they were all to be in a general state of compliance, then we could talk about about the structure of accounting standards.  But first, we need compliance.  Generally speaking, he favors specific accounting rules that permit no wiggle room.  Such rules make it easier to crack down on wrong-doers.

Professor Ketz’s latest editorial is “The Iffiness of IFRS.”  He responds to the SEC and suggests several issues that still need to be worked out before IFRS adoption.  Although the context for his remarks is opposing IFRS adoption, he believes the biggest problem with the proposed transition is:

… whether IFRS statements can be audited and what will happen in the courtroom after a firm experiences severe declines in its stock price.

Ketz concludes with:

… I again marvel at the rush to IFRS. The benefits do not appear to match or exceed the costs of the adoption.

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Four news sources are reporting that Charles Niemeier is being considered for Chief Accountant of the Securities and Exchange Commission.   This is outstanding good news!

First, what is being reported:

I am surprised, however, that CFO Magazine doesn’t have it.  In my opinion, CFO has the best reporting on current events in accounting (Accountancy Age has the best reporting in Europe).   Tim Reason (CFO editorial director) is first rate.  He has impeccable journalist credentials.  If he’s not reporting it yet, then it isn’t definite yet.  Also to weigh in is Floyd Norris, the most highly respected journalist from the New York Times.

The Chief Accountant of the SEC has a tremendous influence on accounting policy in the U.S.   In essence, the Chief Accountant is responsible for the strategic directions of all matters related to accounting and auditing.   In essence, he is the First Accountant of the United States.  He is at the center of the accounting universe.  Specifically, the Chief Accountant is responsible for:

  1. Oversight of the FASB as it develops and maintains U.S. GAAP.
  2. Oversight of the PCAOB is it regulates auditors and develops and maintains audit/auditor standards.
  3. Coordinating U.S. relations and communications with international organizations that have an impact on accounting standards and practices.

Charles Niemeier, new Chief Accountant?

Charley Niemeier was my choice for SEC chair.  President Obama gave it to Mary Schapiro, instead.   This may work out to everyone’s advantage.  A Schapiro/Niemeier team is, in my opinion, very strong. Mary Schapiro has acquitted herself very well in her public appearances immediately before and after her confirmation.   Her trying to invigorate the SEC with new blood is playing well in the press.

Niemeier’s appointment seems to be Mary Schapiro’s way of making a statement about (1) integrity, and (2) IFRS.  During her confirmation hearing testimony, she testified that she was not sold that IFRS is the way to go.  She followed this up with some written comments that were more negative towards IFRS.   Niemeier is on record as a strong critic of IFRS, at least so far as currently constituted.

If Charley Niemeier is appointed as Chief Accountant of the SEC, then it is a master stroke by Mary Schapiro.  There is no better person to head up accounting policy at this (or any) time.  Niemeier is that good! Charley Niemeier will excel as Chief Accountant because he has such a great mind, the best mind in the government field of accounting regulation.  He has a grasp of the big picture, an absolute necessity for Chief Accountant.

I will sleep much better tonight after hearing of this possibility.  If he actually receives the appointment, I will sleep much better for the next few years.

I believe this is Charley Niemeier’s best career move to create a lasting legacy in the regulatory field.  It is no secret that he has had numerous opportunities floated his way as he winds down his final days on the PCAOB.   I need to go over the SEC chair history again, but I don’t think that an accountant has ever been appointed chair of the SEC.

Mary Schapiro, I beg of you.  Please name Charles Niemeier as the Chief Accountant of the SEC.

Over and out – – David Albrecht

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One of the courses I teach is Intermediate Accounting 2. This semester’s paper assignment is to take a position on whether the U.S. should adopt IFRS or retain its GAAP. To improve the quality of papers I receive, I instituted a system of peer review, requiring each paper to go though two rounds of double non-blind review. The end result was 51 pretty good papers (39 for GAAP, 11 for IFRS, 1 for both). I’ll be posting the four best. This paper is by by R. J. Segovia, a senior in business with a concentration in accounting.

Missing The Target:

Convergence Replaces Improvement

by R. J. Segovia

“The appraisers are still in the old world,” (Aflalo, 2008) remarked Rozanski, Chief Executive Officer (CEO) of Delek Real Estate. Apparently the “old world” is anything except for the International Financial Reporting Standards (IFRS); which includes United States (US) Generally Accepted Accounting Principles (GAAP).  So it seems now that the “Old World” is in the “new world” and the “New World,” or at least the US financial sector of the “New World,” is in the “old world.”  While many would state that the US should not retain GAAP but instead switch to IFRS in efforts to join this new world, I completely disagree with this stance.  The US should retain GAAP and not switch to IFRS because the lack of acknowledgment that IFRS and GAAP are more different than similar will negatively affect companies immediately.   It is well known that US GAAP has extensive guidance and this is exactly what US companies need.  The recent focus and push for convergence rather than the improvement of accounting standards departs from moral and ethical logic (which has faded away and been forgotten) while inferior financial reporting standards are creeping their way into the US financial system.  The analysis of such statements must be thorough so that CEOs in the US are not found repeating the words of Mr. Rozanski who said, “we do not know what the company’s [net] profits are” (Aflalo, 2008).

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One of the courses I teach is Intermediate Accounting 2.  This semester’s paper assignment is to take a position on whether the U.S. should adopt IFRS or retain its GAAP.   To improve the quality of papers I receive, I instituted a system of peer review, requiring each paper to go though two rounds of double non-blind review.  The end result was 51 pretty good papers (39 for GAAP, 11 for IFRS, 1 for both).  I’ll be posting the four best.  This paper is by Amber Soldenwagner, a senior in business with a concentration in accounting.

IFRS:  Not Right for the U.S.

by Amber Soldenwagner

Introduction

The replacement of Generally Accepted Accounting Principles (GAAP) with that of International Financial Reporting Standards (IFRS) has recently been a significant topic of discussion.  There are two sides to this discussion:  those that support the switch to IFRS and those that instead support the retention of GAAP in the U.S.  Those who support switching from GAAP to IFRS argue that IFRS will provide a common reporting language, making financial reporting more meaningful across borders and provide consistent financial reporting for companies with global operations.  Supporters also believe that one common reporting system will reduce costs for companies and make it easier for investors to compare the financial statements of companies from different countries (Diamond and Herrmann, August 2008).

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Note:  this is the final version of this essay.

This is part seven of an eight-part series in which I review the seven International Financial Reporting Standards (IFRS) critics (Sunder, Niemeier, Ball, Ketz, Selling, Jensen & Albrecht) of whom I am aware.  The series continues on regular posting dates, MWF.

In today’s essay, I review the anti-IFRS views of myself, David Albrecht, Ph.D.  An accounting professor at Bowling Green State University in Ohio, I have been a vocal opponent of the proposed switchover in accounting standards for quite a while.  Until starting this blog two months ago, my primary forum was via posts to AECM, the e-mail listserv for accounting professors.

I am opposed to IFRS for the U.S. because (1) the politics of the decision are unwarranted, (2)  I believe it will be bad for the country, and (3) it will not aid the world in creating an integrated financial system. (more…)

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This is part six of an eight-part series in which I review the seven IFRS critics (Sunder, Niemeier, Ball, Ketz, Selling, Jensen & Albrecht) of whom I am aware.  The series continues on regular posting dates, MWF.

Robert E. Jensen

Robert E. Jensen

In today’s essay, I review the anti-IFRS views of Robert E. Jensen, Ph.D., as summarized from his posts to the AECM listserv (Accounting Education Using Computers and and Multimedia) and on his web site page on accounting standard setting controversies.

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This is part three of an eight-part series in which I review the seven IFRS critics (Sunder, Niemeier, Ball, Ketz, Selling, Jensen & Albrecht) of whom I am aware.  The series continues over the next two weeks on regular posting dates, MWF.

In today’s essay, I review Ray Ball’s very popular paper, “International Financial Reporting Standards (IFRS): Pros and Cons for Investor.”  His paper, based on the P D Leake Lecture delivered on September 8, 2005 at the Institute of Chartered Accountants in England and Wales, has since been published in a 2007 edition of Accounting & Business Research. A pre-publication version of the paper is available at SSRN.

Ray Ball, distinguished professor at Chicago.

Ray Ball, distinguished professor at University of Chicago.

Ray Ball’s opposition to IFRS gives instant intellectual respectability to the cause.  If one of the world’s smartest professors does not favor the SEC’s push to change accounting standards, then that should give the rest of us reason for doubt.

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A  series the arguments of seven prominent opponents to the U.S. adoption of IFRS.

Shyam Sunder–IFRS Critic (Yale professor)
Charles Niemeier–IFRS Critic (PCAOB member)
Ray Ball–IFRS Critic (Chicago professor)
Ed Ketz–IFRS Critic (Penn State professor)
Tom Selling–IFRS Critic (consultant, retired Thunderbird prof)
Bob Jensen–IFRS Critic (Trinity professor, emeritus)
David Albrecht–IFRS Critic (Concordia professor, was of Bowling Green)

Yet to write:  Comprehensive argument for IFRS in the USA

Yet to write:  Comprehensive argument against IFRS in the USA

Yet to write: Comparing and Evaluating Both Sides of the IFRS Issue

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