Is it time to stop thinking globally, and to start focusing locally? That’s more or less the consensus among more than 3,700 professional accountants who believe not only has international trade continued to dry up, but that the global economy will continue to erode while those industries that focus domestically will inspire greater confidence.
For finance professionals with a CPA and an auditing or consulting background, it couldn’t be a better time to look for a new post, says Drew Reina, managing director for Accounting Principals, an accounting and finance recruitment and staffing firm.
Whether it’s a role in compliance, corporate finance, risk or internal audit, CPAs with a Big Four pedigree appear to be layoff proof. According to Reina, internal auditors are certainly in great need, and many of his clients are looking for people with three to seven years of experience.
“There’s a lot of growth in that area, and there’s a consistent response from my clients," he tells eFinancialCareers.
Although the US Securities and Exchange Commission has yet to make up its mind on whether the US will abandon US Generally Accepted Accounting Principles (GAAP) in favor of the International Financial Reporting Standards (IFRS), that doesn’t mean financial statement accounting is standing still. Rule changes and clarifications by various US based accounting standards boards affect a number of areas in US financial statements.
Continue reading "2011 Brings Financial Statement Changes" »
Although the GIPS standards do not address the particular challenges of hedge funds, claiming compliance is possible and increasingly important for hedge funds. Creation of a client presentation, the process and frequency of portfolio valuation, and net performance stream calculation methodology are some of the issues hedge funds tackle in claiming compliance.
Continue reading "Solutions for Hedge Fund Managers Considering the GIPS Standards" »
To say that vital financial reporting issues are clamoring for attention is a major understatement. Not only are huge accounting convergence projects underway with the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB), but controversies surrounding such issues as bank window dressing and underfunding of public pension are also hitting the business pages.
Continue reading "Financial Reporting Issues Crowd Agenda" »
In this clip from the CFA Level I Sample Class, instructor Andrew Spieler addresses how the financial reporting transition from US GAAP to IFRS will have a large effect on the CFA Level 1, Level 2, and Level 3 exams. “IFRS is now the dominate part of the CFA curriculum,” Spieler notes. CFA students will need to be prepared in order to manage this transition in the exam.
Just when you thought it was safe to trust European banks again, the Wall Street Journal analyzed recent EU bank stress tests and found that a number of banks underreported their sovereign debt liabilities. Many investors, and EU regulators, were hoping to put the Greek debt crisis in firmly in the rear view mirror, but given the spotty nature of the bank’s disclosures, this may heighten concerns, rather than put them to rest.
Continue reading "EU Banks Sovereign Debt Mystery Deepens" »
At last year's meeting in Pittsburgh, Pennsylvania, representatives of the G-20 renewed their commitment to complete convergence in accounting standards by June 2011—less than two years away. While the group did not explicitly propose worldwide adoption of IFRS (International Financial Reporting Standards), that is the implication, because it hardly seems likely that the rest of the world will drop IFRS in favor of GAAP (US Generally Accepted Accounting Principles). The following table offers a side-by-side comparison of the two standards.
Continue reading "Current Major Differences Between IFRS and US GAAP" »
The seemingly unstoppable juggernaut of US IFRS (International
Financial Reporting Standards) adoption has
collided with the global financial crisis, one of the few
barriers that may be capable of derailing the rush to a
single international accounting standard. Adoption
of IFRS in the US is now far from a given, and
even the roadmap published by the US SEC
(Securities and Exchange Commission)
in November 2008 has the potential
to be sidetracked or possibly
abandoned now that President
Obama’s administration has
taken office.
Continue reading "SEC in a Quandry over Its Push for IFRS" »
This article is in response to Neil O'Hara's "The Unfair Attack on Fair-Value Accounting."
In early April of 2009, FAS 157, the mark-to-market accounting statement, was amended amid great controversy. Depending on the categorization of an asset (as belonging to one of three “levels”), FAS 157 had required firms to value financial assets on a mark-to-market basis. Level three assets such as mortgage-backed securities and collateralized debt obligations were subject to this requirement, even though, unlike traded securities, they did not benefit from liquid markets. The new rule gives firms greater discretion as to how level three assets are valued, and allows them to take into consideration the illiquid market for these securities.
Continue reading "Some Mark-to-Market Concerns about Liquidity" »
The blame game for the financial crisis has no limits. In an effort to divert attention from their own culpability, bankers who took risks they did not understand and politicians who encouraged mortgage lending to people with shaky credit have pointed the finger at the accountants. Banks faced with severe losses on their structured debt portfolios and other securities pressed regulators to suspend accounting policies that oblige the banks to record these holdings at fair value, which usually means the current market price.
Continue reading "The Unfair Attack on Fair-Value Accounting" »
Michael Moran, of Goldman Sachs’s Global Markets Institute, kicked off January’s “Changes to 2009 Financial Statements” (an event sponsored by NYSSA’s Improved Corporate Reporting Committee), and he could not have given us a more timely presentation on accounting for transfers of financial assets if he had read an advance copy of the Valukas Report on Lehman Brothers.
Continue reading "An Update on Changes to Financial Statements" »
Meeting behind impressive security barricades in a revitalized Pittsburgh, Pennsylvania, representatives of the G-20 (Group of 20) nations announced agreements in principal on a number of fronts, including financial services regulation, stimulus efforts, global trade, reallocation of IMF (International Monetary Fund) shares, and rebalancing national economies. The group affirmed its new standing as the global economic forum of record, formally eclipsing the G-7 (Group of 7) and the G-8 (Group of 8).
The financial crisis has brought to the fore, and indeed accentuated, the inadequacy of both regulatory bodies and our efforts to measure and mitigate risk throughout the financial system—particularly within the realm of structured finance, or securitization. While it is easy to criticize the performance of various market participants, it would be more productive to contemplate the underlying themes that emerged in the wake of this recent crisis. If we can accurately identify the root causes of the problems, we will be better positioned to resolve them.
Traditional measures of cash flow are typically based on GAAP-defined calculations of operating cash flow. However, as documented extensively in Financial Warnings (Mulford and Comiskey, 1996), The Financial Numbers Game: Detecting Creative Accounting Practices (Mulford and Comiskey, 2002), and especially, Creative Cash Flow Reporting: Uncovering Sustainable Financial Performance (Mulford and Comiskey, 2005), cash flow measures based on GAAP are easily open to manipulation and, because they exclude the implied cash effects of non-cash transactions, are often misleading.
As the global economy begins to find its way back from the brink following the financial crisis, the impetus is shifting from the day-to-day efforts to keep the system afloat to the long-term fixes that are needed to maintain and increase its stability and flexibility. All eyes are on the national governments and regulators who continue to shape a structure that either will be up to the task of managing an increasingly globalized economy or will fall short of the mark, resulting in the lack of a sustainable recovery, further crises, or both.
Continue reading "Mending the Seams: International Regulatory Reform" »
A bill introduced to Congress this past summer, and subsequently handed over to a Senate subcommittee for further consideration and/or revisions, could reverse a hotly debated January 2008 US Supreme Court decision. That decision, Stone-Ridge Investment Partners LLC v. Scientific-Atlanta Inc., upheld a lower appeals court’s April 2006 decision that secondary participants in a corporate fraud cannot be held legally liable for their behind-the-scenes participation in the scheme. Their actions, the high court reasoned, were simply too far removed from and could not have been known by investors.
Continue reading "Revisiting StoneRidge: Congress Could Restore Aiders' and Abettors' Liability" »
Someone once remarked, after seeing a long putt of mine barely drop into the hole for a birdie, “Gravity, not just a good idea, it’s the LAW”. Yes, this was a corny remark, but it certainly can be related to ethics within the professions. Ethics is not just a good idea; it’s the LAW for CFA® charterholders and the CPA profession, as well as many other professions.
While there is no universally accepted definition of “growth” or “value,” and there is much debate about the merit of adhering to style boxes, style benchmarks serve important benchmarking, risk management, and asset allocation needs by measuring style box movements in a manner congruent with broadly accepted definitions of style factors. Periodic reviews and incremental adjustments at intervals of 5 to 10 years provide a basis for style benchmarks to stay relevant through time.
Click here to find a case study on the periodic recalibration of style benchmark factors.
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