Diantie CPA

STOP IFRS - Tax Tips

2011-02-01T10:03:00.000-08:00

I am posting tax tips everyday on my website www.diantiecpa.com. Please visit it for helpful hints and other tax info.

STOP IFRS - Tax Tips

2011-01-29T20:29:00.000-08:00

My tax tip today continued with the earned income credit. Please visit my website for details. www.diantiecpa.com

STOP IFRS - Tax Tips

2011-01-28T19:28:00.000-08:00

My tax tip today is about the Earned Income Credit. Please visit my website at www.diantiecpa.com for details.

STOP IFRS - Tax Tips

2011-01-27T14:16:00.000-08:00

Please visit my website for daily tax tips until April 18, 2011 www.diantiecpa.com

STOP IFRS- Tax Tips

2011-01-24T18:57:00.000-08:00

Please visit my website www.diantiecpa.com for daily tax tips.

STOP IFRS - Tax Tips

2011-01-23T12:19:00.001-08:00

Please visit my website at www.diantiecpa.com for daily tax tips.

STOP IFRS - Tax Tips

2011-01-22T18:47:00.001-08:00

Please visit my website for daily tax tips at www.diantiecpa.com

STOP IFRS - Tax Tips

2011-01-21T17:51:00.000-08:00

Please visit my website at www.diantiecpa.com for my latest tax tips.

STOP IFRS - Tax Tips

2011-01-19T17:58:00.001-08:00

Please visit my website www.diantiecpa.com for my daily tax tips.

STOP IFRS - Tax Tips

2011-01-18T13:51:00.000-08:00

Please visit my website www.diantiecpa.com for daily tax tips until April 18, 2011.

STOP IFRS - Tax Tips

2011-01-17T19:23:00.000-08:00

Please visit my website for daily tax tips. www.diantiecpa.com

STOP IFRS - Daily Tax Tips

2011-01-15T06:56:00.000-08:00

I am posting tax tips daily until April 18, 2011. Please visit my website at www.diantiecpa.com.

STOP IFRS - New Blog

2011-01-12T19:27:00.000-08:00

Happy New Year to everyone who have been reading my blog.

I am continuing my postings on my website - http://www.diantiecpa.com/.

Also, if you want to read a good quote or have one to share, please check out my daily quotes blog at - http://www.diantiedaily.blogspot.com/

I hope to catchup with my CPE classes soon.

STOP IFRS - Ethics and the Bottom Line

2010-11-18T07:46:00.000-08:00

Another class in Ethics but no confessions in this class. Instead the class addressed some of the usual issues we have heard regarding whistle-blowing and the perpetrators of fraud.

What drives ethical behavior in an organization? According to John Felming, there have to be appropriate incentives for employees. That means pay me or reward me for behaving ethical or else I will do otherwise. Interesting take on what drives ethical behavior. I'm ethical and I don't get an extra reward by my employer for that.

Perpetrators of fraud - who are these people. Research says that about 90 percent of the financial fraud in the US have been perpetrated by the CEO, CFO or both. CEOs and CFOs are you listening? It is a bold statement and based on research has to be true. What about public image? Imagine you introduce yourself to a group of people as the CEO or CFO of a company. What do you think goes off in these people's heads? Many years ago the answer could possibly be - wow, he/she has a great position and it is definitely worth aspiring for. Today, one of those people could be analyzing in his/her head that you are a possible perpetrator of fraud. 90 percent is an astounding number.

Research was done to analyze cases reported for whistle-blowing. The results - when the whistle-blowers stand to benefit, they were more likely to alleged wrongdoing by a company. Naturally, whistle-blowing have a negative economic consequence for the companies involved. These companies tend to have more earnings restatements and more shareholder lawsuits. The good news is that the companies exposed to whistle-blowing improved their governance. CEOs were replaced and insiders on boards were reduced.

Who could be a likely whistle-blower? The answer to that was discussed in the class - "who is a CPA". Whether in public or private practice, CPAs become aware of wrongdoings by companies. For CPAs in public practice, being a whistle-blower is no big deal, as the CPA still have many other clients. What about the CPA in private or "industry" practice? Who is the client? Yes, the client would be your employer. A dilemma at its best! So what do you do? In the current economic crisis, you don't have the luxury of quitting and finding a job waiting for you. If you have solid finances to back you up and put ethics at the top of your list, you will probably quit and wait it out to get another job. But this option is not available to most people so they ignore it.

I have earned my four CPE credits for ethics. Next challenge here I come.

STOP IFRS - IRS & Taxing Agencies

2010-10-14T09:47:00.000-07:00

A few days ago, I took another class titled "How Much Must You Reveal to IRS and Taxing Agencies?". One is the issues raised was documentation of uncertain tax positions. I recently read that the IRS is requiring companies to disclosure their uncertain tax positions for 2010 and that the schedule UTP has now been finalized.

The class discussed "the work product doctrine" which protects documents prepared in anticipation of litigation as it relates to uncertain tax positions. Then there is the "Kovel Doctrine". What is this? I never heard of it before! In simple words, engaging an expert to explain and or interpret documents which are written in a format that a lay person cannot understand and still maintain the attorney/client privilege with respect to the documents. For example giving a balance sheet to an accountant and asking him/her to explain what it is all about so that you can take that document together with its related explanations and make those a part of your "privilege documents".

These issues were raised because of the "Textron" and "Deloitte" cases. In the Textron case, it did not want to produce tax accrual workpapers and IRS argued it should because the papers were not "created for use in litigation". In the "Deloitte" case, the issue was also tax reserves work papers; however, the Court ruled in Deloitte's favor that the documents were protected.

Lessons learnt - know what is Work Product Doctrine; Attorney /Client Privilege; and Tax Practitioner Privilege. Documentation is key when resorting to use any of these protections.

STOP IFRS - Increased State Business Taxes

2010-10-07T09:23:00.000-07:00

Catching up with my classes; I had time today to do another one! This class was titled "Increased State Business Taxes: Adjusting the Sales Factor."

In 1957 the Uniform Division of Income for Tax Purposes Act (UDITPA) recommended the apportionment of business income using a three-factor formula, using property, payroll and sales. The idea was to have a uniform division of income for income tax purposes. However, based on a survey it was found that three quarters of the states used the receipts based method.

How does apportionment work? Personal property - sales are assigned to the state where the property was shipped. Services - assigned to the states based on where the cost to perform the service were incurred. Cost of performance is implemented in two different ways. Some states, uses the proportional method and other states uses a "plurality concept" i.e. the state with the most costs, gets the entire receipt assigned to it.

It was noted that the majority of states have now adopted the "single receipts factor".

Other points noted are: - it is difficult for out of state businesses to get a fair say in state court; acknowledgement of the principle of comity; use of the Tax Injunction Act.

Federal courts have ruled that companies cannot be denied tax benefits resulting from special purpose entities created to encourage economic development.

Pending bills before Congress are the Business Activity Tax Simplification Act and the Mobile Workforce Tax Fairness Act.

STOP IFRS - Reengineering Health Care

2010-10-06T13:26:00.000-07:00

This is not a good sign that I have not been keeping up with this blog. The bad news is that I am also falling behind in my CPE classes which is the reason I started this blog. The new resolution has to be to do at least one class per week.

My class today was about Reengineering Health Care. What does that mean? In simple terms changing the way we do things related to health care. The three pillars identified were technology, process and people. Technology - Better systems that will enhance the communication process is one example. Process - determining the processes and identifying where improvements are required. People - The human element to bring everything together.

"The fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service, and speed." That is the definition from the book "Reengineering Health Care" by Jim Champy and Harry Greenspun. Sorry guys, but I like my explanation better.

A study done by the U.S. government estimated that almost 70 percent of health care costs in the United States are attributable to chronic diseases that are largely preventable. Included in that list are diabetes and cancer. According to the American College of Preventative Medicine (ACPM) approximately 4,600 Americans die each day from these preventable diseases.

Fact - the most expensive place to deliver health care is at a hospital!

How can engineering health care be achievable? Suggestions are improving health care delivery; improving the administrative process; wellness programs; medication management; and safety.

An interesting fact noted which resulted from having electronic health care records is that the records belong to the patient and not the doctor!

Speaking of health care - it is time to schedule that annual physical!

STOP IFRS - Health Care Reform

2010-08-19T11:27:00.000-07:00

As promised, this blog will be about Health Care Reform. It's still a hot topic with lots of emotions attached to it.

Key highlights are: mandatory health insurance for individuals in 2014; "Play or Pay"; a "comparative effectiveness fee" for group plan; health spending accounts caps; an increase in Medicare payroll tax for certain employees; a Medicare investment tax; a new excise tax known as the "Cadillac tax"; and the list goes on.

Given that health insurance costs have been increasing at the rate of 6% to 8% annually, companies are already assessing the impact this law will have on their operations.

Begining in 2014, companies with 50 or more full-time employees are required to offer health insurance. The definition of a full-time employee is one who works more than 30 hours a week under the new law. Does this mean that companies will stop offering health insurance to employees who work less than 30 hours? Maybe.

Retirees need to be concern. Checks for $250 were being mailed to certain participants covered by the Medicare drug program which is to suppose to assist with bridging the gap the "donut hole" created (the difference between the $2,800 maximum paid by Medicare for drugs and the individual out of pocket expenses of up to $5,000).

Each of the key highlights listed above requires its own detailed paragraph. I will continue to write about this topic as changes to the various sections of the law goes into effect.

STOP IFRS - One Year for Blog!

2010-08-13T13:31:00.001-07:00

Today is exactly one year ago since I started this blog. Below is a quote from my first blog.

But the ten million dollar question is "will I be able to keep-up with this blog I just started?". As my trusted advisor will say to me "we shall see".

Well, I did keep it going but I did not post to it as much as I wanted to. Actually, I started another blog called "Diantie's Daily Quote" which has been keeping me in-line as this blog requires a posting everyday.

I will begin writing a Blog for a group of entrepreneurs about accounting and taxation to be included in a "community blog". I am excited about this and I am sure my audience will be making comments.

My CPE class today was about Health Care Reform. That blog will be written next week.

STOP IFRS - Fair Value

2010-07-23T08:24:00.000-07:00

US GAAP - ASC 820 establishes a three level hierarchy of fair value methods. Financial statement presentation requires level 1, level 2 and level 3 discosures.

The goal is that IFRS and US GAAP will be similar for disclosures. US GAAP currently requires more disclosures.

IFRS generally does not allow net presentation for derivatives; hence, level 3 disclosures under US GAAP may differ.

All fair value measurement in IFRSs after initial recognition are "recurring".

STOP IFRS - IFRS Continued

2010-07-22T12:34:00.000-07:00

Continuing with IFRS versus US GAAP.

The first thing some users of financial statements look for is how much cash does the company has. And cash was listed as the first item on the US GAAP Balance Sheet. Under IFRS, you have to search for where cash is listed.

Under US GAAP, current assets were listed in order of liquidity, not so with IFRS. I have seen a few companies that have a slightly different presentation for the "Statement of Financial Position" (IFRS).

In a nut shell, US GAAP users need to look carefully at the IFRS statements and familiarize themselves with various items are listed.

STOP IFRS - IFRS Financial Statements

2010-07-21T06:59:00.000-07:00

As promised, I will starting writing about IFRS, and will begin with Financial Statement Presentation.

As required by IAS 1: A complete set of financial statements must include:

(1) - Two statements of financial position - formerly known as "the balance sheet".

(2) - Two statement of comprehensive income - formerly known as "the income statement".

(3) - Two statements of cash-flows.

(4) - Two years of changes in equity.

Currently there is an exposure draft that would change the statement of comprehensive income to the "Statement of Profit or Loss and Other Comprehensive Income" when referring to IFRS. Companies will still be able to use "Statement of Comprehensive Income".

STOP IFRS - Ethics

2010-07-20T08:21:00.000-07:00

I seem to be getting back on track with my CPE classes. Today's class was touching and titled "The Consequences of Inattention to Ethics".

In this class, Justin Paperny, a former broker for UBS, talks about how ignoring ethics caused him to go to jail for 18 months.

Rather than relay his entire story, I would list a few actions mentioned and my opinion of what should have been done.

Justin brought in accounts worth $3 million but was not given commission because he had no "production number" at that time. Advice - get everything in writing when you are dealing with financial transactions especially if you are entitled to receive money.

Justin was asked to bring his mentor and or senior partner to meetings with him to help close deals. Advice - moral support is always good but know who your friends are. If you suspect that you are being used, that person is not your friend and you are on your own. Politely end the friendship; tough, but it's reality.

Justin mention ethics and said that "it just wasn't discussed" even though all the companies he worked for had a code of ethics. Advice - have your own set of ethics to work by because you have to live with your actions no matter what.

Justin said he was asked to send a letter to his friend stating that the friend would get 5,000 shares of Jetblue stock which was not true. Advice - when a employee at my current company asked me to sign a report saying that I had audited it even though I did not do so, I said "NO". Do the same thing. When people ask you do sign documents or do anything that you know is not true or right or correct, say "No". These people know what they are asking you to do is wrong but they still do it anyway especially when they hold a senior position to you. I talked about what happened to me as an auditor in a previous blog.

Justin said he lied to the FBI. Advice - never ever think that you can lie to any government official during an investigation and not be caught. I guarantee you that the person or persons that you are trying protect by lying will expose you. If you are lying to protect yourself, you will be exposed, because somewhere down the road, you would have made a mistake which will surface to haunt you. In Justin's case, his former business partner (mentor) was cooperating with the FBI which helped nailed Justin.

Good class and a wake call to remember that in the business world "ethics" is always first; money will come later.

STOP IFRS - Diantie CPA

2010-07-18T17:10:00.000-07:00

I named this blog "STOP IFRS" but I have not been writing much about IFRS. During the next few weeks, I will begin to write about what is happening in the "IFRS World" as a few of my friends have been asking me for advice.

STOP IFRS - Derivatives

2010-07-16T11:34:00.000-07:00

Derivatives- what are these? My class today was titled "Accounting for Derivatives: Don't Hedge Your Bets."

A derivative is a financial instrument that is based on an underlying asset. Dr. Ira Kawaller thinks that "They're terrific risk management tools...".

Accounting for Derivatives was originally issued as FAS 133 but now it's ASC Topic 815. There are two accounting treatments for derivatives. It has to be recognized as an asset or liability and gains or losses, changes in the value of that asset or liability, are recorded in current income.

Also discussed in the class was hedge accounting. There are basically three types of hedges that qualify for special accounting treatment - the fair value hedge, the cash flow hedge and the currency exposure hedge. The objective of a hedge is to match the timing of earnings recognition. To use special accounting, proper documentation is mandatory or else it it not allowed. Noted is that once a company decides that it wants to use hedge accounting and qualifies to do so, the company has to continue using it until the company decides that hedge accounting is no longer necessary.

The hedge must be tested for effectiveness and ineffectiveness. What's this? Simple answer - if your hedge is ineffective and not doing what it suppose to be doing, no special accounting treatment is allowed.

Words of advice - get expert help if you are not sure about the proper documentation and disclosures required for hedges.

STOP IFRS - Unions : What to do...

2010-06-14T10:47:00.000-07:00

Three more classes for May and June is here!. My class today was about unions and specifically what to do if they show up at your door.

The Employee Free Choice Act (EFCA) - this is a legislative bill that is being considered by Congress and has been a top priority for labor unions. The Act has three main features. One of the features is that it would require employers to recognized a union, for purposes of collective bargaining, if the unions get the majority of the employees to sign a card authorizing the union to represent them.

Did you know that labor unions have been declining and now only have a representation of about 7.2 percent? Labor unions have abandoned the National Labor Relations Board elections. Employees are rejecting the election process and labor unions are finding other ways to force and possibly pressure employees to join the union.

The State of Oregon has passed legislation that prohibits employers from conducting meetings to inform and educate employees about unionization. Executive orders signed by President Obama does not allow companies seeking to do business with the federal government to use the monies obtained to educate employees about unions.

The High Road Initiative subjects any company wanting to do business with the government to scrutiny and screening by purchasing officers.

This is a good class for anyone wanting a quick education on Unions and the Employer. Great material for an essay!

STOP IFRS - Global Supply Chain Risk

2010-05-24T12:11:00.000-07:00

My class today was about global supply chain risk. What is one of the biggest challenges when it comes to the supply chain management per Gary Lynch? Finding out where the problem is. Can you manage risk? I say yes in certain situations. Companies have tried to manage risk given the limited resouces available to do so. What was noted as the number one obstacle in the supply chain risk management? The inability to see the supply chain. We are all a part of the supply chain.

What can go wrong? 72% of units shipped in the world come through six major port in Asia and the one event that comes to mind is piracy. Scary when you think about it! A suggestion was to have safety stock on hand at different points in the supply chain. This would apply to manufacturing a product but not necessarily to supplying a specific service.

Lesson to be learnt - "assume the worst case and don't get too close to the unknown danger".

STOP IFRS - Fair Value Accounting

2010-05-07T06:28:00.000-07:00

My last CPE class was about Fair Value Accounting.

Definition of fair value per FAS 157 is:- the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction, that is not a forced liquidation or distressed sale, between market participants, at the measurement date.

Key points to note - SFAS is now ASC Topic 820. Share-based payments and multiple element arrangements are not governed by ASC Topic 820. An "Entry Price" is the price you pay to acquire an item today. An "Exit Price" is the value you assigned to an item you sold on a specific date.

Also discussed in the class was "Defensive Assets". What are these? Think in terms of buying out your competitor to prevent it from further competing with you.

Some of you accountants have already had to come up with a fair value presentation for your financial statements so you know about level 1, level 2, and level 3 inputs. For others, level 1 are observable inputs for identical types of items like share of stock or inventory products. Level 2 are observable for everything else such as interest rates. Level 3 are non-observable or un-observable.

What about IFRS? IFRS is using the cash flow measurement for fair value.

Looks like I am catching up with my classes. I hope I can keep it up!

STOP IFRS - Preparing for the Unexpected

2010-05-03T13:26:00.000-07:00

My class today was about continuity planning and behavior.

Most of us have been involved with business continuity planning. This class was not about backing up files or having off-site support facilities but more so about behavior. How we react and how we continue to deal with a crisis.

It was noted that businesses are not good at recognizing and dealing with traumatic events in the workplace.

OSHA has recommended that employers have a support system in place to deal with the emotional aftermath of a sudden traumatic or threatening event.

One of the best practices mention for continuity planning and behavior is a human impact audit. What is this? Taking a look at your culture and unique challenges and being able to make accurate predictions about the behavioral consequences says Steve Crimando of Extreme Behavioral Risk Management.

Here are a few suggestions mentioned for dealing with stress and anxiety stemming from the financial crisis:

- Limit your exposure to news stories and constant alerts about the situation.

- Exercise, eat well and rest, even though it may be difficult to sleep.

- Stay busy - physically and mentally.

I have still not caught up with my CPE but I hope to do so this month.

My new blog is getting all my attention; here is the link www.diantiedaily.blogspot.com.

STOP IFRS - Independent Contractors

2010-04-26T10:03:00.000-07:00

My last class was about independent contractors. I have written about this previously and there is not much more to add except to be aware of how you classified your workers. Know that if someone is classified as an independent contractor, the possibility exist that at some point, this determination maybe challenged by the worker, the IRS or even the State Government. Be aware that if a worker is misclassified as an independent contractor, then you will definitely be hit with a substantial tax bill.

Will the Safe Harbor Rule save you? It depends on your circumstances.

Rule of thumb - know the 20-factor test and apply it whenever in doubt as to how you should classify a worker.

STOP IFRS - From Rules to Principles

2010-04-22T09:30:00.000-07:00

Yes, I have fallen behind with this blog and my CPE classes because I started another blog which is keeping my brain ticking.

My class today was "From Rules to Principles: What You Need to Know". Again, another CPE classes discussing IFRS. The anticipated date for convergence to IFRS is set for 2011. Noted in the class was that US GAAP has over 25,000 rules whereas IFRS has only 2,000. "Blame the lawyers" was a reason given for so many rules. Judgment calls - the preparer and the auditor have to get more comfortable with this and be prepared to explain these judgment calls to the audit committee and the board. The fear is that principles-based standards may lead to more shareholder actions (lawsuits) where the premise is that the directors did not act in "good faith". Possible hot button for the SEC is restatements.

I don't know what my next class will be about but I definitely have to catch up.

STOP IFRS - New Blog

2010-04-09T20:28:00.000-07:00

I started a new blog today which is titled "Diantie's Daily Quotes". With a little inspiration and loads of determination, I hope to come up with a quote to post to my new blog everyday. Wish me luck! When I started this blog last year it was a challenge and I am amazed that I kept it going even though I am not able to post to it as much as I would like to.

Here is the link to my new blog: www.diantiedaily.blogspot.com.

Next week, I will be back to talking about IFRS.

STOP IFRS - Challenges of Financial Reporting

2010-04-07T10:41:00.000-07:00

My class today was about "Challenges of Financial Reporting in Today's Environment" as discussed in a Controller's Roundtable of the FEI. Highlights noted were that companies had stopped giving guidance to analysts as to how they were performing which in turn caused analysts to focus on the fundamentals of each business. The three legged stool was noted as the audit committee, the external auditors and management. A special challenge noted was testing for goodwill impairment. Per Larry Salva of Comcast, impairment testing is done annually. I can relate to that because I also did it annually. To make my life easy, I created a system so that I do not forget what needs to get done and I also documented reasons for why I did certain calculations. Now imagine me teaching my impairment analysis to the external auditors every year? What about IFRS? Per Heather Bellini, it would be helpful to have one common set of standards. Per Sam Ranzilla of KPMG, we're just scratching the surface in terms of what it would really take. Yes, I agree!- to be continued.

STOP IFRS - Expiring Tax Benefits

2010-03-31T13:30:00.000-07:00

My last class was about expiring tax benefits. The COBRA subsidy deadline has been extended for employees who were involuntary laid off through February 28, 2010. (The previous cutoff date was December 31, 2009). You can extend your COBRA coverage to cover you for fifteen months versus nine months in the previous program. Will Congress extend the date beyond February 28, 2010? Possibly, because the unemployment numbers are still rising! The Work Opportunity Tax Credit is set to expire at the end of 2010 but it may be extended by Congress. Employers should take advantage of this credit when they hire new employees that falls into the specific categories. Be aware that corporate estimated payments for the third quarter of 2014 has been increased for corporations with at least one billion in assets. Also there will be higher penalties for failure to file a partnership or S corporation tax return. The penalty is effective for tax years beginning after December 31, 2009 and will be $195 per shareholder or partner. My next class is "challenges of financial reporting in today's environment".

STOP IFRS - Preparing for the New Rules

2010-03-29T11:50:00.000-07:00

Yes, I have fallen behind in my postings and also my classes. Well as always, I am determined to get back on track. My class today although titled "Proxy Disclosure Enhancements: Preparing for the New Rules" was about executive compensation. Per Donald Nemerov, the SEC may increase governance and accountability around executive compensation, not decrease it!. What else? "The SEC has now signaled that the helpful comment letters are probably a thing of the past." What did I Learn? Compensation risk management will be required for all companies especially TARP companies. Equity compensation is now going to be reported as what was granted and not earned. CD&A - what is this? Compensation Discussion and Analysis which is now required to be filed by public companies and has a required format covering six topic relating to compensation. What's the consensus out there about these new requirements? Companies know this is required of them and are working on it. Noted was that the CD&A should be in Plain-English. Preparing the CD&A is not a function that I have to perform, but it won't hurt me to take a look at what others are doing!

STOP IFRS - Revenue Recognition

2010-03-15T08:27:00.002-07:00

My last class was titled "Revenue Recognition: Still a Work in Progress?". Most accountants know it has become a chore to keep up with all the guidance issued regarding revenue recognition. One person describes it as "...entire alphabet soup...". Yes it is! The general rules for revenue recognition are that the revenue has to be realized, the earnings process has to be complete, collection has to be reasonable and rights must be conveyed to the user of the product or service. So why is this process so complicated? One answer is revenue arrangements with multiple deliveries. EITF 00-21 required Vendor Specific Objective Evidence (VSOE) of the pricing of various components of the deliverables which are being delivered. What does this mean? In simple terms, if you have a product with various components which are all required for the product to function as one unit, you could not recognize revenue on the individual piece as you delivered them to your customers. Now there is EITF 08-01, which is effective for years beginning after June 15, 2010 and early adoption is allowed. What does this new guidance do for companies? It will allow companies to recognize revenue earlier than they did in the past. Then there is EITF 09-3 which was ratified by FASB. This guidance allows companies to recognize revenue based on how their business models are built. Notice I did not mention IFRS. Differences in revenue recognition between IFRS and GAAO is another blog.

STOP IFRS - Revenue Recognition

2010-03-15T08:27:00.001-07:00

STOP IFRS - Social Networking

2010-02-27T09:01:00.000-08:00

My CPE class this week was about "Social Networking: Ignore at Your Own Risk". I am one of those people who have on their "to do list" to sign up with Facebook, Twitter, YouTube, etc and have not gotten around to doing it all. So this class was definitely for me. Twitter has between 18 to 23 million members. Per my class, many businesses had no idea how to capitalize using Twitter, while other businesses were already using it and seeing growth in sales. The initial reaction of companies was that social networking was something that needed to be stopped in the work place. It was noted that employees found a way around the "system" and was still able to access these social networking sites. Management then changed it tune to "I'll let you use it, but I am going to monitor it...". While all this was happening, the marketing groups in these companies were looking at ways to use social networking to benefit the organization. Ideas such as "we could send out daily specials through Twitter messages..." emerged. On the flip side, people who tweet about their whereabouts raised issues for companies as to confidentiality of information sharing. I think the reason a lot of people are not on these social networking sites is lack of privacy. I have heard people say that they don't want everyone out there knowing who they are and what they are up to. What steps have I taken to bring myself into the social networking age? I signed up with Facebook, Linkedin and YouTube. I still have a long way go, but I'll eventually get there.

STOP IFRS - Economic Recovery

2010-02-08T12:06:00.000-08:00

My class over the weekend was titled "Economic Recovery: Alive and Well?" According to statistics out there, the economy is growing. There has been an increase in exports and the net worth of Americans has risen. Dr. Glenn Picou gave Fed Chairman a grade "B" for job performance. Recall that Mr. Bernanke was given an "F" by Peter Navarro. What was the role of the Federal Reserve in the recovery? Implementing various stimulus packages to improve liquidity. Interest rates are low now but they will eventually rise as the economy picks up. Will the banks begin to lend money again? Yes but this will take a while as banks start to reduce their excess reserves. Excess reserves for banks are at a historical high. The Unemployment rate is still rising but there is hope that layoffs are flattening out. Word to the wise - be patient and give things time to work!

STOP IFRS - Controller's Roundtable

2010-01-30T11:20:00.001-08:00

Since it is freezing to death here in New York, I decided that I should continue with my CPE classes. Today's class was about the Controller's Roundtable held by the FEI. What's on the mind's of the controllers? The economy and restructuring. The controller of Cummins, Marsha Hunt, made a good point about restructuring and reduction in workforce noting that when it occurs, you need to make sure that key controls are passed on to whomever is assuming the new roles. I am sure most of us who have taken over the responsibility for performing a function and was given no direction as to how to get the task done can agree with this statement. A question raised was what key metrics are used to monitor financial results and controls? The Chief accounting officer of Tyco, John Davidson, responded DSO. Another answer was inventory turnover. It was noted that measuring and monitoring is being done more frequently such as weekly. Another question put to the controllers was "how do manage risk?". Tyco has an enterprise risk management process; Cummins has a Chief Risk Officer; and at Davey Tree, the Treasurer is responsible for evaluating risks. An interesting question raised was "does your company have a culture that encourages dissenting views?" Davey Tree's controller responded "... there are some folks at the lower levels that own a lot of stock. People just don't have any apprehensions about speaking up, and speaking up quite loudly." I will end with that note.

STOP IFRS - Technology Economics

2010-01-29T14:51:00.000-08:00

My CPE class this week was about "Technology Economics: Gaining an IT Advantage". As usual I have my definitions and facts so here goes. Technology Economics as defined by Dr. Howard Rubin is a term to emphasis the technology component of the greater economy. The technology component of GDP is $4.2 trillion and the fourth largest economy on the planet per Dr. Rubin. Apparently, there is one application for every 600 people on earth. The 2009 global spending on technology was about $4.2 trillion which translates to $701 per person. Wow! What is the rule of thumb regarding technology spending? Spend on technology when the economy is down. What is the cost of IT to the average company? It is about 5% of revenues. What's one of the usual responses when management wants to cut IT spending? "Don't expect to get your e-mail!". I sure there are other similar responses. My next class wille about the Controller's Roundtable discussion.

STOP IFRS - New Financial Reporting

2010-01-23T11:22:00.000-08:00

I am behind on my postings but will get back up to speed. My class last week was on the New Financial Reporting Consensus. What's new? The Emerging Issues Task Force consensuses will now be issued as Accounting Standards Updates for codification purposes. Discussed in this class was Defensive Intangible Assets - what are these? They are intangible assets that a company acquires and does not intend to use in its current business. These assets are acquired to prevent others, eg "the competition", from getting a benefit from the assets. Under SFAS 141 (R) a value will now have to be assigned to these assets whereas historically an insignificant value was assigned. Also discussed was Instruments indexed to a Company's Own Stock which maybe freestanding or embedded. The classification of these instruments maybe in stockholder's equity or accounted for as a financial asset or liability. It gets more complicated when the instruments are indexed to the stock of a subsidiary. Briefly discussed was revenue recognition on multiple deliverables. An explanation of this requires a separate blog.

STOP IFRS - "Always A Winner"

2010-01-07T18:26:00.001-08:00

Yes, believe it or not my class was titled "Always a Winner" but there was more "In Expansion and Recession". Peter Navarro, author of "Always a Winner" and university professor, talked about the economy and surviving in a recession. His advice to executives, "... read the financial press, pay attention to figure out where the economy's going..." Mr.Navarro gave fed chairman Bernanke an "F" for job performance. Why? Because he is debasing the US dollar which is going to drag the country down. It appears that Mr. Navarro does not like the printing press to be churning our money and neither do I. What is some of the advice Mr. Navarro shares? One is to spend 15 to 20 minutes everyday to read the financial press and follow the 11 leading economic indicators. I tried to follow the economics indicators years ago and could not keep up with my quest. Two was strategies and tactics to apply over the course of the business cycle such as counter-cyclical advertising. And three was to build a culture that's business cycle sensitive. What did I learn from this class? The US GDP growth has been about 6-8 percent historically when coming out of a recession; a double-dip recession means the economy goes downward instead of continuing upwards when coming out of a recession; and spend 15 to 20 minutes a day reading the financial press and follow the leading economic indicators because my 401(K) plan will thank me. In October of 2007 I started to look into real estate as an investment option and my financial and trusted advisor was not in favor of this idea. I was also told not to invest in stocks. I listened to both pieces of advice and held on to my money. I continued to follow the real estate market closely and knew it was in trouble and today I thank God that I listened to advice given to me.

STOP IFRS - IFRS UPDATE

2010-01-06T18:46:00.000-08:00

Today I read a publication by E&Y regarding IFRS. The article was titled "New survey reveals US companies want to adopt IFRS." It was stated that "According to a recent survey, 70% of CFOs and other finance professionals in the US support the SEC's approving its proposed Roadmap". Wow! This is an impressive number in favor of IFRS so now I have do some further research on where those numbers came from. When I started this blog back in the summer, most of the companies I read about that commented on IFRS were not in favor of it; hence, the "STOP IFRS" slogan was adopted by me for my blog. More interestingly, the publication had an article that was titled "Ernst & Young tells India: don't change IFRS". So is the adoption of IFRS in the US going to be 2011, 2012 or some other year? I think I will vote for some other year and yes I am going against the survey. Hopefully in two years I will be a little wiser regarding IFRS and who knows, maybe I will change my slogan from "STOP IFRS". Back to reality. I printed the reading material for my next CPE classes so I will reporting on this soon.

STOP IFRS - New Year Resolutions

2010-01-01T19:18:00.000-08:00

Back to blogging. Happy New Year to everyone! I was not able to take those two last CPE classes for December but I am happy to report that I do have my 40 CPE credits for the required year. Actually I have more than 40 credits since I was following the August year-end before the calendar-year change went into effect. Writing this blog helped me to stay focused on my CPE and also my reading. I recently read an article by Robert Hosking titled "What Does Your Workplace Image Say about You?" One of my resolutions for this year is find out the answer to that question. How? I plan to be bold and ask all my co-workers to give me an assessment. The article addressed five areas which were communication skills, team player mind-set, attire, gossiping and non-verbal clues. I know my co-workers maybe a little hesitant to be honest so I will have to think of a reason to get them to do it. And yes, when I get the feedback , I will be bold and post how I was graded. Self-improvement is good and this is one resolution that will be kept!

STOP IFRS - OSHA & Safety

2009-12-24T07:58:00.001-08:00

Last week I posted a blog about OSHA and mentioned the US Airways incident in NY City's Hudson River. This week the world is faced with another incident, this time on the island of Jamaica involving American Airlines. The wonderful news is that everyone on the plane survived. My OSHA CPE class focused a lot on record keeping relating to incidents at the workplace. A plane crash is not a incident that you can somehow not record; but more importantly, how do you prevent it? Safety training and more safety training! I have not been following the news closely about thw recent plane crash but what I have not heard yet is anyone praising the captain. I heard more comments eluding to maybe he has some fault in this incident. The weeks and months to come will unravel the mystery. Merry Christmas to everyone and Happy Holiday too!

STOP IFRS - IFRS Update

2009-12-20T17:16:00.000-08:00

Wow! I am finally writing about IFRS. I read an article today in the December issue of CFO magazine titled "Topline" "IFRS Convergence vs Conversion" by Marie Leone. Per the article, the big decision by the FASB-IASB and the SEC is scheduled for 2011 which is just about a year from now. I talked about the feedback from companies regarding IFRS in a previous blog. What are companies saying now? Per the article, there is still some resistence out there to IFRS. Global companies will be preparing two sets of financials, IFRS and GAAP, so that they will be ready when and if IFRS becomes "law". My company is doing just that. I am just about finish with GAAP financials for year-end and about to start IFRS. As I mentioned before, the parent of my company is UK based so I don't get to choose how the financials should be done. What does FASB chairman Robert Hertz has to say about all this per the article? "...the convergence effort would provide an "improvement" over current GAAP by shifting it toward overarching principles and away from more-easily-manipulated rules." I have two more CPE classes to take for December and I hope to complete the classes and write about them before the end of the month.

STOP IFRS - Meeting Minutes

2009-12-19T17:15:00.000-08:00

My blog today will address meeting minutes as I have not taken a CPE class to write about. I recently read an article titled "Mastering Meeting Minutes" by Shirley Fine Lee. She outlined several key points that should be included in minutes. Yes, this blogger takes minutes and has been doing so for about 27 years. I started doing this for a non-for-profit organization and then as part of my job and then again for non-for-profit groups. Was the article on target about the processes involved in taking and recording minutes? Yes it was; but what it did not talk about is how to handle issues that should be included in the minutes that often left out because of personal conflicts. How do I do it? I write everything down that was said at the meeting and then as I type up the minutes I summarize what should be included. For my job I circulate the drafts for comments and include them in final version for presentation at the next meeting. For my non-for-profits, I take the minutes to the meetings and circulate them to everyone. The reading of minutes takes place for some groups while other groups choose to skip the reading and move ahead with the agenda. Why did I mention conflicts and issues left out of minutes? Many times I get requests to review my hand written notes from meetings. Why is that? During the editing process, someone may delete something I wrote and later a question arise as to whether or not the issue was discussed. Minutes are a required part of the books and records of a company. For not-for-profits, failing to keep accurate minutes or no minutes can lead to the IRS revoking the tax exemption status. When ever a dispute arises in an organization regarding actions taken or to be taken, management looks to the minutes as a source to justify a resolution. So all you minute takers out there, taking minutes may seem secretarial or administrative, but these minutes are a very important part of the records of an organization.

STOP IFRS - BLOGS

2009-12-17T19:59:00.000-08:00

Today my short blog is about other blogs out there that I follow which I will share with you. I discovered Michelle Golden's website a few months ago which lists blogs by accountants; here is the link http://goldenmarketing.typepad.com/weblog/accountingbloglist.html; This is a good listing and a great source of information. I have not taken the test for the courses that I am currently taking (OSHA and Employment Audits)but hope to do so tomorrow. If anyone out there needs CPE credits before the year ends, check out the FEI on-line classes that I blog about.

STOP IFRS - OSHA

2009-12-15T18:51:00.000-08:00

I am making history today as this is my fourth blog in as many days. I started a CPE class today about OSHA so I will be expressing my two cents on what I think about OSHA. OSHA is defined as the Occupational Safety and Health Administration which an agency of the Federal government. Many of you will remember the landing of US Airways on the Hudson River in NYC. This incident opened the eyes of many people as to how important safety training is. Thank you Captain Sullenberger! Every month I get an e-mail from our safety officer outlining tips and guidelines to stay safe. I read it and even commented once when the landing of US Airways was not mentioned in the e-mail. OSHA and what it stands for is definitely important to everyone. Just imagine you trip and fall at work because of faulty tiles or flooring. You or someone else had previously complained to management about this and nothing was done to correct the situation. This is where OSHA come into play. Accidents at work have to be documented regardless to what it is. While on business trip in the UK, I noticed that at one of the offices minor maintenance was being done. I was amazed at all the signs that were posted in the area and even more amazed that hazard signs enclosed the working areas. Good job! By the way, I was in the UK to perform an internal audit. I wish I could say that my local office does the same thing but it does not and many times I find myself caught in the middle of the hallway while the maintenance workers are busy at work. To be continued...

STOP IFRS - Ethics and Honesty

2009-12-14T18:02:00.000-08:00

We are experiencing bad weather and I am posting a blog three days in a row! I did not take a CPE class but I wanted to expand on my previous ethics posting with my own experience. Has anyone ever been asked to sign his/her name to financial statements to say that you have audited them and that they are accurate when you did no such thing? Well I was asked to do so and I said NO!!! Why, because I can't audit financial statements; I don't work in public accounting. Second, I will not say I audit something when I did not. When I did work in public accounting, I was asked not once but twice to say that I had observed an inventory count when I did not. How did I handle this situation? I wrote a report stating exactly what happened which was the inventory count had already taken place the day before I got to the site. Saying No! to a request like this is not easy for everyone to do, but at the end of day, when you say No!, you know you did the right thing. So what does this have to do with honesty? When you have a set of principles, values and morals that you live by, you hold them dear and practice what you preach. So whenever you faced with what appears to be an ethical dilemma, do the right thing.

STOP IFRS - Employment Tax Audits

2009-12-13T18:02:00.000-08:00

This is amazing! I am actually posting a blog two days in a row; WOW! My CPE class was about Employment Tax Audits. The IRS is in the processing of starting compliance audits focusing on employment taxes beginning just about now. 6,000 businesses will be selected at random to be audited to determined if they are complying with payroll tax and compensation rules. Independent Contractor versus employee classification will definitely be looked at as this raises the question as to whether or not a person is entitled to benefits offered to employees versus independent contractor. Section 530 safe harbor; what is this? Section 530 of the Revenue Act of 1978 basically says that if you treat every person performing the same function as an independent contractor, and you have been doing so consistently, this is your safe harbor. Reimbursement plans, accountable versus non-accountable plans, may also be looked at during these audits. How does a company prepare for these audits? Start looking at your files and make sure that your documents are in order and hire experience help to assist your with the process. I don't know what my next blog will be about but I will definitely try to get it posted during the coming week.

STOP IFRS - Internal Control

2009-12-12T17:59:00.000-08:00

Yes, I am back to blogging. The topic from my class that I will be writing about is Internal Controls. What is this? Internal Controls as defined by COSO "is a process that's effected by an entity's board of directors, senior management, and other members of the company..." The definition continues " The objectives are: efficient and effective operations; reliable financial reporting and compliance with relevant laws and regulations." A question raised was whose responsibility is it to monitor internal controls? The answer was the company's board, the financial executives and the independent auditors. Each group has its responsibilities but in my opinion, a company's management should be first on list for ensuring that internal controls are established, put in place and working. All companies have internal controls but are they put in place and are they working? Most financial executives will answer yes to this question, but most, if not all executives know that there are many times that some internal controls fail because no one is monitoring them. Why is that? When rushing through the financial statements close process, many times checks and balances are often overlooked to get to come up with "the numbers" and ninety-nine percent of the time, no one goes back to review the accuracy of the information. Then the auditors come in to review or audit, and lo and behold, the questions begin. I believe that the auditors take great pleasure in writing that management letter to comment on at least one weakness in a company's internal control system. Compliance with laws and regulations is part of the objectives of internal control which I did not comment on and will leave to the experts. My next blog will be about Employment Tax Audits.

STOP IFRS - Ethics

2009-12-09T08:48:00.000-08:00

I am guilty of falling behind in my postings due to work but I will try to get back on track now. As promised, this blog will be about my Ethical issues class. Ethics as defined by Webster's dictionary is a system of moral values. One issued discussed was the concern with ethics for CPAs in public practice versus CPAs in private practice. The answer is to follow the rules of your State Boards of Accountancy. The general rule is that a CPA cannot be associated with or lend his/her name to financial information that he/she knows is incorrect or fraudulent. Independence in fact and appearance was discussed. This is always an issue especially for accountants who perform the attest function. The usual question raised is - is the CPA (accountant) related to someone in a company that hold a key position? and if so, then the CPA (accountant) is not independent. However, if you have a close friend working at the company, your independence is not impaired. But appearance will still be an issue in eyes of the public at large. My take on ethics is to do what is right and when faced with a dilemma, do the right thing. You may not get rich following this rule but you sleep really well at night and you are able to hold your head high at all times.

STOP IFRS - Behind in Posting

2009-11-27T20:20:00.000-08:00

Yes. I have fallen into the hole of not keeping up with my blogging. It is now the year-end closing period at work for me and I don't have time to wash my face. I am still keeping up with my CPE classes and I have two CPE classes to write about which I took. One is about Ethics and the other Sarbanes Oxley. These postings will follow during the week but I wanted to post this blog to let everyone know that I am still trying to keep my blog going. I am actually thinking about starting another blog where I can talk about anything and everything such as products I like and those that I don't. Also about my observations and customer services etc. To everyone out there, I hope you had a wonderful thanksgiving and enjoy the remainder of your weekend.

STOP IFRS - NOT FOR PROFIT ACCOUNTING

2009-11-10T13:02:00.000-08:00

I am straying away from CPE as my classes for November are not ready but I am very interested in NFP (Not-for-Profit) accounting as I work with several charities and once in a while I am called upon to help with the books. Today I was given a booklet from a seminar with the words “WHAT IF THE IRS CAME TO YOUR CHURCH TODAY!”. Another notable quote in the booklet is “GOD IS NOT PLEASED WHEN YOUR BOOKS ARE OUT OF ORDER”. There are so many times I emphasize to NFPs that record keeping is very important and they agree but still continue to neglect the books. One NFP suggested that I should come to its offices on weekends and help it with the books. No one offered to pay me but everyone assumes I have nothing else to do on weekends so I should work for free. I did do that for a few years! The result; I ended up being involved in a court case where I had to answer for the books. Yes, I got praises for the excellent record keeping but court cases should not be the reason to keep your books in order. My suggestion to NFPs is to pay an accountant to review whatever you have as your books. He/she will be able to give you feedback as to whether or not you need additional help. Chances are if you have a good system in place, you won’t need to do anything else but for other NFPs an hour or two of a CPA’s time giving you direction is invaluable and “GOD WILL BE PLEASED THAT YOU HAVE YOUR BOOKS IN ORDER”.

STOP IFRS - EVA MOMENTUM

2009-11-09T12:15:00.000-08:00

What is EVA Momentum? I hope to answer this question in my blog today. It is the change in EVA. Now this raises the question as to what is EVA? Economic Value Added. This was one of those CPE classes where I had to read the material several times to get a gist of what was being discussed. Ratios were discussed primarily ROI - Return on Investment –which is used by many financial executives and the deficiency with this ratio. What’s great about EVA? “EVA takes ROI and deducts the cost of capital; … it’s a risk-adjusted return.” One point noted was that you get the same net present value using EVA as you do using discounting cash flow. The formula for calculating EVA Momentum is the change in EVA divided by base period’s sales. So what is EVA saying? You have to take into account the cost of capital when analyzing your business performance; do not rely solely in ROI or ROC (Return on Capital).

STOP IFRS - New Accounting Codification

2009-10-30T11:47:00.000-07:00

My Blog today will be about the new FASB Accounting Codification. Yes fellow accountants, just as you were getting use to the new standards SFAS 165, 166, etc. it is now time to change. The new codification is effective as of July 1, 2009 and applies to all quarterly and annual financial statements that will be issued for periods ending after September 15, 2009. This means all of us have to learn the new system and learn it now! My Step one was to take this CPE class and Step 2 was to go to the following website and register myself for the basic view of the codification for free http://asc.fasb.org. (Do not type www.asc.fasb.org as this is not the correct address). My Step three was to get a copy of the Accounting Standards Codification to read on the train. My Step four will be to go to the website and actually test the site. A few things I learnt from the CPE class was that the word “Entity” will replace the words Company, Organization, Enterprise and Firm when referring to the business as a whole. There will be nine areas and ninety topics under each area; there will also be subtopics under the topics section. The areas will be designated by numbers beginning with 100s through 900s and the topics be in 10s such 410, 420, 430 etc. These numbers will be further expanded to subtopics coded as 410-10, 410-20, etc. Now you might be thinking that there could be a letter following these numbers; I don’t know because I have not actually gone to the site to test it out. There will be cross referencing available to the old GAAP standards on the website; SEC rules will be there also and these will begin with the letter “S” e.g. S70. There will be no guidance for non-GAAP matters such as Cash Basis and Income Tax Basis. Finally the The U.S. GAAP hierarchy will now be authoritative and non-authoritative. Never a dull moment in the accounting world.

STOP IFRS - Health Care Costs

2009-10-23T13:36:00.000-07:00

I am falling behind in my CPE classes so I need to catch-up. My class today was about Health Care Costs and what you can do before health care reform becomes a reality. Per a survey done by Mercer, health benefit costs are expected to rise 7.4% this year. Today is actually the deadline for me to make my health benefit election and my portion of the cost increased to about 20%. Per my CPE class, it was stated that the employees’ share of health care costs have dropped over the last 30 years. Lo and behold, behavioral change has been deemed to be the key to improving your health and naturally people who adhere to this wants a reward for doing so. There is a “Lottery System” where members accrue points and then become eligible to win a prize(s). There is also a “Deposit Contracts” system where participants make a bet upfront on the goal they expect to achieve. Health care reform means costs will go up. Technology is one component targeted for controlling costs. There is concern over State mandates but if you have a self-insured program, you do not need to worry. Mental health care will have to be included in plans and the level of the benefits increased. Conclusion – include the finance department in the decision making process. My next blog will be about FASB’s Accounting Codification. IFRS will become a reality for me starting next week!

STOP IFRS - Customer Experience

2009-10-09T13:48:00.000-07:00

My CPE class today was about “The Customer Experience”. What is the customer experience? The answer depends on who you asked. It was noted that some companies who had a definition perform well while others without a definition did not meet financial targets. The definition given by Linda Ireland is every customer experience starts with a person who has a need or a problem or desire that they pay money to have go away and their experience is what happens and how they feel as they learn about their options for the first time. I think this is a good definition and it challenged me to start thinking about my own definition of “Customer Experience”. This class talked about “Zappos” and the customer experience which reminded me of a Nightline show that I saw featuring the founder of Zappos and discussing the same topic. It is interesting how many people use the “Zappos Customer Experience” when talking about customer service. One issued raised in the class was a scenario where a client asked “…what do you do if your customers don’t want a customer experience?” Great question and the gist of the answer was you as a company have a choice. Linda Ireland made a comment that we can all relate to which is “… it feels different when you walk into Target than when you walk into Nordstrom’s. There is something different. Or even Target versus Wal-Mart…” How true is this statement? I liked this CPE class and I even printed the links to similar articles to read.

STOP IFRS - Taxes

2009-10-08T13:22:00.000-07:00

I few days ago I listened in on a Tax webinar which allowed me to earn CPE credit except I have not completed the process as yet. The issues discussed included the Cash for Clunkers, the COBRA subsidy, the Earned Income Credit, Additional Child Tax Credit and the First Time Homebuyers Tax Credit. The rebate that was given for Cash for Clunkers does not have to be included in income per the discussion. For states that have no income tax, you do not get an additional deduction for the sales tax relating to the purchase of your new vehicle. The COBRA subsidy I discussed in a previous Blog is still in effect through December 31, 2009 for those who have been involuntary terminated. The Earned Income Credit will be increased for 2009 but I am not sure if I heard that the percentage will now be 45%. To claim the full benefit of the Additional Child Tax credit, the amount has been lowered from $8,000 to $3,000. The First Time Homebuyers Tax Credit for 2009 has been increased to $8,000 for homes purchased in 2009 before December 1, 2009. Also discussed was the American Opportunity Tax Credit which modified the Hope Credit that has been increased to 4 years for high education and the maximum credit for 2009 is $2,500.00. As stated before, I stay away corporate tax classes but since this was a webinar about individual taxes, I was curious as to what I can learn to share in this Blog.

STOP IFRS - Swine Flu update

2009-10-02T10:10:00.000-07:00

As there are no more CPE classes to take at this time, I am following up with the Swine Flu. This morning on TV, I heard that there are about 600 thousand vaccines available which obviously will be administered to the high risk group first. Last weekend I was given some info published by the CDC including a brochure with “3 Steps to Fight the Flu”. Step 1, is take time to get vaccinated; Step 2 is take everyday preventive actions; and Step 3 is take flu antiviral drugs if recommended. One flyer I got was titled “H1N1 ‘Swine Flu’: What You Need to Know” and one of the questions asked was “Will my seasonal flu vaccination protect me against H1N1 influenza?”. The answer was No. Another question was “What should I do if I have flu-like symptoms?”. The answer was if you have a fever with a cough or sore throat, stay home from work or school until you have been free of fever for at least a day. You don’t need to go to the hospital if your illness is mild. Another question was “Should I keep my children home to protect them?” and that answer was No unless they are sick. I visited the CDC website at www.cdc.gov and Swine Flu is still listed as No. 1 on the top ten list. It is definitely worth the extra effort to educate oneself about the Swine Flu and the preventative measures to take.

STOP IFRS

2009-09-28T14:02:00.000-07:00

Economic Value Management was the topic of my last CPE class. All three words “Economic”, “Value”, and “Management” were each defined from the Webster’s and Oxford’s dictionary. The interesting thing about these types of classes I took recently is that books have been written about the topics so the CPE class becomes a question and answer session between the author and moderator. One of the questions asked was “ …is it fair to say that many organizations – and their executives – didn’t do the due diligence necessary, prior to the economic crisis, to anticipate – and to weather – the drying up of capital and credit?” The response was “Yes, I think that is true…”. Now it looks like most people had a crystal ball regarding the financial crisis and those who knew it was coming earned the right to say “I Told You So!”. I certainly was not one of the fortune tellers because I would have not lost the thousands of dollars in my 401K plan like the majority of people did. Next time around I am seeking out these fortune tellers for advice. Executive compensation was discussed and apparently there is a “say on pay” which is popular in the UK. Since my employer was acquired by a UK company, I will soon have a “say on pay” (a right I intend to exercise) when I become a shareholder. I have no more CPE classes for this month so I will continue to follow-up on other topics that I have previously covered.

STOP IFRS

2009-09-24T14:07:00.001-07:00

Breaking the Annual Performance Trap was the title of the last CPE course I took. This class discussed Beyond Budgeting and attempts to get away from the formal budget process that takes up more than four months of the finance department’s time. One point raised was that there is a disconnect between traditional budgeting tools and available management processes the reason for this is a mindset gap. A suggestion is to eliminate budgeting altogether and come up with another process. It was noted that some European companies have already come up with alternatives to traditional budgeting and are doing well. The Balance Scorecard came up again and it was suggested that the name be changed to the Linked Scorecard because of its linking system design. One person suggested that we have to rethink how we do finance and commented that we are hopeless at measuring value. A report from a workshop described finance people as “… very confident, a little bit arrogant, not as humble as they might be.” Wow! Adaptive organizations were discussed and noted that they use forecast to support strategy review rather than check where they are against the annual plan. Their forecasting process is relevant and fast. These organizations avoid unproductive activities like “…tracking down numbers, fixing broken links, and debugging macros.” I am sure this is very familiar to those of us who have used Excel spreadsheets as part of our budgeting process. I decided that I like the “STOP IFRS” slogan so I have officially adopted it as the title to my blogs.

STOP IFRS - BALFOUR BEATTY

2009-09-18T10:40:00.000-07:00

I promised to follow-up on topics that I have already covered in my CPE classes and yesterday I was given a booklet on IFRS corporate consolidated financials statements. So I decided to start with my adopted slogan “STOP IFRS”. I recently read an article in the “CFO” magazine titled “Accounting The Silent Treatment” which talked about a panel discussion with the Securities and Exchange Commission (SEC ) regarding comment letters on IFRS. The article noted that only 1% of the companies in the United States that would be affected by this change have spoken up. In addition, quotes from comment letters by various financial executives were redacted and published in the article. One comment was “In our opinion, there has been no groundswell of public opinion promoting a conversion to IFRS. In fact, we have never heard an investor in our company, any stock analyst covering Hertz, or any lender with which we do business suggest to us that they would prefer we report our results in IFRS.” This sounds like a “No” to me! Here is the website if anyone wants to read some of the comment letters: http://www.sec.gov/comments/s7-27-08/s72708.shtml. Now back to me and the IFRS booklet. Yes, I will now be a preparer of financials using IFRS starting I believe in November. Is this intuition or what? What will I do? I have to ask my employer to enroll me in some classes to get myself up to speed and stop thinking GAAP.

Performance Management

2009-09-16T14:01:00.000-07:00

Performance Management (PM) was the topic of my CPE class. This is not any easy subject to write about but I will try to relay what I learnt from the class. Performance management is the framework for managing the execution of an organization’s strategy. The goal of performance management is to make better decisions in a timely manner. My view is that PM is being proactive in all aspects of your business as oppose to being reactive when surprises appear. Key Performance Indicators (KPIs) exist in many companies but how and if companies actually used the information from the KPIs to make informed decisions is unknown; it was noted that some companies have too many KPIs. Apparently there is a disconnect among various departments as to what is performance management. Why? Each department sets up its own monitoring tools to measure performance and hence there is no synergy. The three questions posed relating to business performance are “What ?”, “So What?” and ‘Then What?”. It was noted that nine out of ten organizations fail to successfully implement strategy. Wow! In my class there is required reading section and for this course the required reading was titled “Rules for Assuring Poor Performance”. It was a good article. The article mentioned something that accountants can all relate to: budgeting numbers are obsolete a couple of months after the start of the fiscal year. A good way to distract your managers is have them work for six months on the budget for the next year which prevents them from focusing on important things. And yes, sending the budget back to be redone a few times too. I have been there so I know this is very true. You are not encouraged to be smart in this kind of environment! In my next blog, I will follow-up on some of the topics I covered previously and share articles I read about these topics.

CPE - Swine Flu

2009-09-11T11:52:00.000-07:00

The FEI posted the courses yesterday so I had to launch a class since this Blog is about my CPE experience. I took a class titled “Swine Flu: Is Your Organization Pandemic Ready?” Yes, it is a course for CPE credit! What did I learn? A pandemic was defined as an infectious disease that is spreading through human populations across a large region which is similar to the definition in Webster’s dictionary. Swine Flu is called the “novel H1N1 virus” by the World Health Organization (WHO) and the Center for Disease Control and Prevention (CDC). The WHO raised the outbreak to a “Phase 6” which is the highest phase on its pandemic alert scale. There are various concerns including traumatic and mental health. From a business perspective, this is where “Business Continuity Planning” is put to the test. The course mentioned that one company had a 70% absenteeism because of school closures. The message to companies is “Be Prepared for the Second Phase of the Swine Flu” because it will be coming! I heard on the news recently that there are not enough vaccines for everyone so that means the vaccines will be given those high risk individuals first. It was determined that young adults fall into the high risk category. It is predicted that there will likely be an outbreak of Swine Flu on college campuses this fall. How do the rest of us protect ourselves? On the front cover of my local town’s newspaper is an article titled “Ready for Swine Flu, round two” which I read this morning. Preventive tips listed included: get a seasonal flu shot; cover your nose and mouth with a tissue when you cough or sneeze, and throw the tissue in the trash; wash your hands often with soap and water; and avoid touching your eyes, nose and mouth. What is the scary part about the Swine Flu? You can have it and not know because fever is only one of the symptoms. Educate yourself by going to the http://www.cdc.gov/ website for more information. Swine Flu is listed as number one on the CDC.Gov top ten list.

CPE On-Line Classes

2009-09-08T11:06:00.000-07:00

I will share my views about on-line classes. My first on-line class was a course given by a university. The way the class was organized is that an instructor gave the assignments, a text book was provided and all participants in the course were required to be involved in an on-line discussion as various scenarios were presented by the instructor. Well that sounded easy enough to do except you had to constantly log-in to the course and make sure you participated in the on-line discussions or else the instructor will scold you. I hated the experience as it required much more time from me than any other classroom course than I had taken! I resorted to printing on paper everything I needed to study from. I passed the class and received my credit and told myself never again will I take an on-line class. A few years later, along came the on-line CPE classes offered by the FEI and I decided to give on-line learning another chance. I started taking the classes and found the experience to be much better than the university course I had previously taken. I saved time by not having to go and sit in a CPE class and I liked the format of the FEI on-line classes so I stuck with it. Now over five years later, I am writing a blog about my CPE classes. Amazing for someone like me! So, does this mean I give my seal of approval to on-line classes? It depends on the format of the on-line class. I took few other on-line classes and did not like the way the classes were designed. Over the weekend I read an article in the June 2009 “CFO” magazine about on-line classes. There is now a term called “Blended Learning” and per the article it “facilitates critical thinking…”. I intend to process with caution when it comes to on-line classes as part of me is still attached to the face-to-face human contact in a live classroom setting.

STOP IFRS

2009-09-03T10:30:00.000-07:00

As promised, my blog today will address the “STOP IFRS” sign on the cover of the “Business Finance” magazine. I took a closer look at the magazine and it printed three of the “STOP IFRS” signs in the July/August 2009 issue. I guess once was not enough to make the point. The article is titled “Are Global Standards Bad for America?” written by Jack Sweeney. I don’t want to summarize his article but I will quote some of the things he mentioned. “While I think that Rick is inclined to do this given Enron’s desire to increase their exposure and influence in rule-making broadly, he is interested in knowing whether these types of commitments will add any formal or informal access to this process (i.e, would these types of commitments present opportunities to meet with trustees of these groups or other benefits).” This quote is from an e-mail written by David Ducan, the Arthur Andersen partner who was in charge of the Enron audit. What is David talking about? Apparently, Rick Causey, the chief audit officer at Enron, had inquired of David as to how much influence a $500,000 donation to the International Accounting Standards Board could buy. Yes! This e-mail was uncovered during the 2002 congressional inquiry of Enron per the article. Wow!!!. So what does all this mean and why is there a concern over IFRS? In my second blog, I indicated consulting firms as a beneficiary of IFRS implementation . This article goes one step further and says “… not only the eagerness of an American company to begin influencing international standards but also the willingness of an audit firm to help extend its client’s global reach. To date, the accounting industry – keyed up by the Big Four accounting houses – can be counted among the biggest backers of the U.S. adoption of IFRS.” The cause of the commotion is that the International Accounting Standards Board (IASB) is not independently funded and it could very well be easily influenced given the right dollar amount of the contribution. I think this a valid concern. The FEI has not posted CPE classes for September so I have to ponder over what I will write about next.

CPE - Ghost and Zombie Assets

2009-09-01T12:40:00.000-07:00

Yesterday my CPA class was about Ghost and Zombie Assets relating to Property, Plant and Equipment. Yes, apparently definitions exist for these types of fixed assets. Ghost assets are assets that are recorded on the books but cannot be located; the physical asset cannot be found or seen anywhere. Zombie assets are defined as assets that are not recorded on the books but have a physical appearance and can be seen. These are items that were purchased but were never recorded in the fixed asset register. These Ghost and Zombie Assets raise internal control issues for companies. Why is this happening when management is certifying that there is a good internal control system in place as part of SOX? What role does the auditor play in all this? The auditing firm will usually raise its concern about the fixed assets system in the management letter and offsetting this is a promise from management that the issue will be addressed. Most companies have issues reconciling their fixed asset registers. One suggestion is to raise the minimum capitalization level which for some companies may be from $500 to $1,000 or higher depending on the type of asset. Others are to hold managers accountable for assets under their control and another is to get a barcode system in place. Since IFRS is in air, I have to mention again that component depreciation is required under IFRS and LIFO is not allowed. Speaking about IFRS, I saw on the cover of a magazine a picture of the American flag and “STOP IFRS” written on the flag. In my next post, I will comment on the IFRS article.

CPE - State Taxes

2009-08-29T07:21:00.000-07:00

My CPE class this week was about State Taxes. I actually avoid corporate tax classes but I thought it would be great to diversify my topics. What did I learn? I now know that terms exist such as "throw-out" and "throw-back" regarding taxes. What is this about? It is an allocation method used by states to determine their share of taxes relating to your business activities in a specific state. Then there is " Cost of Performance". This apparently is rule that says you will be taxed on the sales in the state where your services were performed. And yes, they maybe an iTax! Currently most states do not tax digital downloads but given the billions of dollar in sales relating to these downloads, iTax maybe the sales tax on these digital downloads. If you use an on-line service provided by an "Application Service Provider" and it involves New York State, guess what? You will be taxed! Why? Because the argument is that you are getting a license to use software and therefore, it is taxable. In my course, the tax partner said "...there seems to be a desperate grap for revenue" and "... the taxation of services through a backdoor approach" when referring to New York State. I think other states will follow New York for their share of sales taxes whether or not it involves digital activities.

CPE COBRA Subsidy

2009-08-26T10:31:00.000-07:00

As promised, this blog is about the COBRA subsidy plan. The new law became effective on February 17, 2009 as part of the American Recovery and Reinvestment Act of 2009. The Federal government will cover 65% of the cost for COBRA for up to 9 months. The plan is for employees who were involuntarily terminated from September 1, 2008 and will continue through to December 31, 2009. To be eligible, you must have been laid-off or terminated. The coverage is not for people who voluntarily resign from their jobs. The earnings limits are that a single person cannot have an AGI greater than $125K and if you are married filing jointly, your AGI cannot be greater that $250K. How will this plan work? The employer will pay 65% of the cost of COBRA and the terminated employee will pay 35%. The employer will then claim the 65% as a credit against the payroll taxes it owes to the Federal government. There is a one month lag as to when the employer can claim the credit. If you declined COBRA coverage prior to the new law, you should have been given the opportunity to receive coverage under the subsidy plan starting March 1, 2009. Employers were required to notify all terminated employees of this change. Failure to notify employees on a timely basis will result in a penalty of up to $110 per day per employee who has not yet received a notice. For everyone out there who is eligible, this benefit is definitely worth thinking about. For the rest of us who are still employed and have coverage, keep this benefit in mind should you lose your job before December 31, 2009.

CPE SFAS 166 and 167

2009-08-24T10:14:00.000-07:00

This is my fifth posting in less than two weeks. Wow! I am amazed that I am able to stick with this blog and that I actually have information to share about my CPE studies. In a nut shell, the effective date for SFAS 166 is the first annual reporting period that begins after November 15, 2009. So what is SFAS 166? This statement revises SFAS 140 by removing the exception from applying FASB 46 to qualifying special-purpose entities per the FASB. What does this mean? Among other things, there are now conditions that must be met to determine whether a transaction should be accounted for as a sale or transfer. The new statement should result in more transparency for users about the transfer of financial assets. SFAS 167's effective date is the same as SFAS 166. What's new about SFAS 167? It includes "qualifying special-purpose entities" and amends FIN 46 (R) to require ongoing reassessments of whether or not a company/enterprise is the primary beneficiary of a variable interest entity. In addition the "quantitative based risk and rewards calculation" will be replaced with a qualitative approach which will determine the entity that has the obligation to absorb losses and the right to receive benefits. Guess what? Early application of both SFAS 166 and SFAS 167 is prohibited per the FASB!. In my next blog, I will share what I learnt about the new COBRA Subsidy.

CPE Subsequent Events

2009-08-21T13:28:00.000-07:00

Yesterday my CPE class was subsequent events and off-balance sheet items. Yes, there are changes. We now have SFAS 165 dealing with subsequent events; SFAS 166 addressing accounting for the transfers of financials assets; and SFAS 167 which deals with amendments to FIN 46(R). In my previous post, I wrote about IFRS and now here are three new standards under GAAP which will impact financials statements in 2009 (SFAS 165) and 2010 (SFAS 166 and 167). What's new about SFAS 165? Per the FASB there are three criteria that has to be addressed: the period after the balance sheet date that management should evaluate events or transactions; the circumstances for recognition; and the disclosures that should be made. You also have to disclose the date that you performed a review of your subsequent events. Comparison to IFRS - IFRS requires evaluation of subsequent events through the date financial statements are authorized to be issued. SFAS 165 requires evaluation though the date the financial statements are issued or are available to be issued. Let's not forget that there are two types of subsequent events. Type 1 addresses measurement and Type 2 addresses disclosure. This SFAS 165 should be relatively easy for all of us accountants to understand. My next blog with continue with SFAS 166 and 167.

CPE & IFRS continued

2009-08-18T10:09:00.000-07:00

I ended my last blog discussing the cost to implement IFRS. What's interesting is that after preparing yourself for this event and spending all that money ( one company estimated $50 million), it is possible that it may not happen. The plan is that the SEC will decide in 2011 which way to go - IFRS or GAAP? I suspect that there is this group out there who wants to stick with GAAP but it is being out numbered by the innovative thinkers dealing with the current economic crisis. Who are some of these proponents of IFRS? Consulting companies of course! In 2008, over 1,000 foreign companies were registered and report to the SEC. Add that number to all the domestic companies and this translates into billions in revenues for consulting services. What is some of the advice that consultants are giving to companies? Prepare yourself for it because it will happen; don't rely on your current work- force to possess the required knowledge to get you through this transition; get experienced people to help you out; and most importantly, start to get an understanding of the differences between GAAP and IFRS now. I almost forgot, there is a "Proposal A" and "Proposal B". The gist of "Proposal A"is that it would require US issuers to provide a on-time reconciliation of US GAAP financial statements in accordance IFRS. "Proposal B", US filers would provide a reconciliation from IFRS to US GAAP annually covering a three year period. I plan to continue to educate myself and be ready whether or not IFRS gets the green light. Over the next few days I will be debating what topic to cover next from my CPE adventure.

CPE and IFRS

2009-08-17T15:29:00.000-07:00

This is my second posting and as I continue to share my CPE experience. Over the week-end, I received one of those magazines relating to CPE that I mentioned in my first posting. Lo and behold, IFRS occupies the middle of the booklet. I now learn that there is an "IFRS Boot Camp". Actually, there will be several of these boot camps occuring from September through January 2010 in various cities and many more to follow. Will I be attending one of these camps? Probably not! I don't think my employer will be thrilled about spending over $6,000 to send me to one of these camps. So I will continue to learn about IFRS through my on-line classes with the FEI. Yes, there was an on-line class relating to IFRS that I took today. The two key things I learnt are that "revenue recognition" and "financial statement presentation" are still issues to be resolved. What else did I learn? There are no "industry-specific guidance' under IFRS. Component depreciation is required and inventory will valued under the First-in First-out (FIFO) method. No LIFO under IFRS. It is suggested that companies get a project management team to lead the conversion effort. The team should include key decision makers. Finally, what is the cost to convert from GAAP to IFRS? Before taking my class, I estimated about $3-4 million for a company with $1 billion plus in revenues and 25 plus offices internationally. Guess what the estimate is? $10 + million a year. Wow! Consulting companies should be jumping for joy! More to come...

Continuing Professional Education

2009-08-13T14:13:00.000-07:00

I started this blog to share my CPE experience in acquiring those 40 hours of CPE required to maintain my CPA certification. As most CPAs can vouch, there is this moment when you wake up and realize that you don't have those 40 hours for the year. So what do you do? You can begin by scanning all those magazines you get about CPE classes as well as the many flyers that have been placed in "File 13" about conferences and seminars. You can also go to the AICPA website to checkout what it has to offer. What do I do? Lucky me! I have a subscription to the Financial Executive Institute on-line classes. Hence, I quickly log-on to check out the FEI listing and start launching classes to take. How do I know which classes to take? My first criteria is to meet the ethics requirement for CPE. After that, I search for topics that interest me and I need to be aware of; for now it is IFRS! Yes, international financial reporting standards is in use now whether we like it or not. What have I learnt so far about IFRS? That is the million dollar question that requires careful answers; more to come about IFRS. But the ten million dollar question is "will I be able to keep-up with this blog I just started?". As my trusted advisor will say to me "we shall see".