Mr. Nitish Grover FCA, AICPA Intl Associate

GLG News by Mr. Nitish Grover FCA, AICPA Intl Associate, Principal, Owner

The Fair Value Debate - The Political Imperative - A Exercise in Futility?

November 19, 2009

Analysis of:Accounting Rules:Divided and Overruled | www.economist.com

Fair value has been in the news for sometime. Also banks are now complaining and so are regulators and politicians. The convergence issue and the impact of a far off standard setter not subject to local influence is having its effects on the debate. In this analysis I look at why fair value should not be influenced by those not well conversant with the subject. While I agree that accountants alone should not influence the debate yet the undue influence of politicians should be avoided.

The Economic Downturn and Revival - Challenges for Accountants and Auditors

November 12, 2009

Analysis of:Failed financial firms:The bust that worked | www.economist.com

The referred article speaks of  the bankruptcy reorganization plan of  one Institution. In this analysis I  take the referred Institution as a  referral point to examine/highlight the challenges which accountants and auditors will face in their stewardship and  attest function.

Accounting and The Gold Price - Fair Value - Valuation Problems to be Expected

November 4, 2009

Analysis of:Gold Price Tops $1090 for First Time | economictimes.indiatimes.com

As the price of gold rises on a week on week basis  one can expect to see ramifications in the accounting arena. There are a number of  investment products sold in the market which are linked to the price of  gold and its physical holding. In this analysis I look at the nature of  problems to be expected  - especially in relation to fair value disclosures.

Working Capital - Internal Audit and Control - Accounting Standards

October 30, 2009

Analysis of:A Crash Course in Working Capital | www.cfo.com

The referred Article speaks of  the importance of working capital, internal audit and  proper financial statement and how these interact to provide a proper business growth environment. In my analysis below I give my thoughts on these aspects.

Offshoring - Changing Accounting Dynamics - Auditing and Control

October 8, 2009

Analysis of:The New Calculus of Offshoring | www.cfo.com

Increased  overseas costs, security dynamics and  the sudden availability of  newly jobless employees has changed the offshoring dynamics. Offshoring continues but the repetitive tasks with high risk and control difficulties are getting out of the offshoring matrix. In this analysis I look at  the effects of these changing dynamics in relation to auditing and control factors.

Central Bank Policy - Gold - Dollar - Accounting and the Gold Standard

October 8, 2009

Analysis of:Central Banks in Europe Hold Rates Steady | www.nytimes.com

The policy of Central Banks over the last year has left the  monetary system in a state of limbo. The value of the dollar in terms of  bullion and other commodities is taking a beating.  The increasing value of gold in currency terms reminds one of the days of the gold standard and the benefits of having gold as a store of  value. In this analysis I take a look at how this increasing value of gold may effect   internal controls and corporate financial policies.

Business Cycles, Legislation and Accounting - Where will it Lead?

September 15, 2009

Analysis of:For Obama, a Chance to Reform the Street is Fading | www.nytimes.com

The current recession is part of a business cycle. The reasons for the recession are several but then a trough after a long period of prosperity is to be expected. President Obama puts the blame on investment bankers and executives. There is also talk of legislation to limit further repeats. I wonder how this will impact accounting and in turn the figures on which financial decisions are made. In this analysis i present some of my thoughts on the subject..

The Impending Changing Capital Structure at Banks - Challanges for Accountants

September 7, 2009

Analysis of:G20 Calls for Better Capital Buffers at Banks | www.ft.com

The G20 meeting has agreed that banks need to be properly capitalized with equity instruments as compared to hybrid debt-equity. A number of other changes in the capitalization of banks is also proposed. This would mean that debt instruments with characteristics of equity would have a bleak future in the capital structure of banks. In this analysis I highlight some of  the issues involved in this conundrum.

Global Debt Situation - Fair Value - Financial Statements - Paradigms

September 6, 2009

Analysis of:US says debt Outlook Worsening | www.ft.com

The global economy is in a tailspin. Politicians and economists like us to believe otherwise amid  worsening job losses and a weakening US dollar. The graph of the USD vs. gold price shows the fall in value of the USD. This situation throws up questions for the auditor/CFO/accountant and others involved with financial statements. Analysts would  also need to evaluate the fair value of assets on financial statements in this evolving situation. In this analysis I look at some of  these questions.

Tax Fudges and Financial Reporting - The Paradigm - Accounting Standards Context

August 25, 2009

Analysis of:Closing the Havens | www.ft.com

Tax havens have represented security against political repression for long. They have also with the evolution of  tax laws become a pain for Governments. This is especially with the growth of acceptability of  the right of the State to levy taxes. The recent developments with Tax Haven authorities agreeing to divulge confidential information raises questions for the accounting profession. In  this analysis I look at issues that these developments raise for the accounting and auditing profession.

CDS Regulation , Accounting and Economic Effects

August 16, 2009

Analysis of:Derivatives Plans Spark Doubts on CDS | www.ft.com

 CDS have created problems for some time now. The proposal to regulate CDS over the counter sales will in my opinion create more problems than it will solve. This is especially in the context of the triple regulation suggested - SEC, CFTC and a dispute regulatory mechanism for the turf between the two bodies. In this analysis I look at the accounting and economic problems that this will create.

Accounting Disclosures - FASB Moves - My Comments

July 29, 2009

Analysis of:FASB Initiates "Disclosure Framework" Project Aimed at More Useful, Organized and Consitent Disclosures | www.fasb.org

 The referred FASB news release speaks of a new FASB project to simplify accounting disclosures and make them more meaningful. In this analysis I look at the relevance of such a major project in the realm of accounting and how this could make financial statements more meaningful.

Serious Frauds and Internal Controls - A Look at Emerging Practices

July 23, 2009

Analysis of:Allegations of massive fraud in the gulf: A $10 billion Saudi Fraud Claim | www.economist.com

Surplus investment cash is always a problem. Loose internal controls and financial practices compound the problem. In the referred article there is an extensive discussion of  how a large and respected Saudi conglomerate defaulted on financial commitments on account of  frauds and lapses perpetrated ostensibly by a family member. In this analysis I look at why and how control practices are and will have to change in response to changing circumstances.

A Season for Fraud - Possible Effect on Audit Quality and Audit Standards

July 15, 2009

Analysis of:Lawyer Sentenced to 20 Years in $700 Million Fraud | www.nytimes.com

As I read the referred article about a lawyer who was at the top of his profession being sentenced to 20 years for fraud and of other cases like Madoff et. all (including the cases over the last ten years) I  think this is the season for frauds. Major frauds are being announced and uncovered in innovative ways including in two major cases by public announcement (Madoff and Satyam). In this analysis I take a look at how this "season for fraud" is going to impact audit quality, audit standards and also forensic accounting.

Securities, Rating Agencies, Accounting, True Value and Fair Value - A Paradigm Look

July 14, 2009

Analysis of:SEC to Create Group to Check Rating Agencies | www.ft.com

The referred article speaks of the efforts of the SEC to monitor and police credit rating agencies. This is ofcourse a welcome proposal. However, it will also have an effect on accounting and the measurement of true value and fair value of securities. In this analysis I take a look at these aspects and how we can expect the rating business to change and also the manner in which values as associated with securities are measured.

Charles Darwin, Adam Smith, Accounting and Financial Rules

July 13, 2009

Analysis of:The Invisible Hand, Trumped by Darwin | www.nytimes.com

The referred article speaks of Adam Smith and Charles Darwin. While Smith spoke of the invisible hand, Darwin spoke of natural selection and survival of the fittest. The referred article is in terms of economics. I look at the same question from an accounting and financial emphasis.

Fair Value - The Continuing Debate - Why it Never Ends?

July 8, 2009

Analysis of:The Fair Value Deadbeat Debate Returns | www.cfo.com

The referred article speaks of fair value and its impact on credit rating. Fair value is related to a number of  instruments including derivatives, hedging and plain vanilla instruments. I was recently at a conference in Agra, India where the Chairman of the IASB Sir David Tweedy mentioned IAS 39 in passing and said that the IASB was still trying to get to grips with its intricacies. In this analysis I look at why fair value will continue to confuse but is essentially the light in the right direction for understanding corporate financial reports.

The Fed, The Economy, Accounting and Regulation - Changing Landscape for a New Century

June 24, 2009

Analysis of:US Groups Face Regulatory Revamp | www.ft.com

Banks, Insurance companies, Investment bankers, Hedge funds - they are all up against the wall facing new regulatory pressures. The Alan Greenspan era is over. Alan Greenspan was supposed to have a magic wand with which nothing went wrong. Its like Napoleon asking for a few lucky generals - Greenspan was one such in the financial world of today. Bernanke obviously is not. In this analysis I look at some of the aspects of the changing regulatory landscape.

Accounting and Financial Risk in the Background of Declining Credit Availabilty

June 16, 2009

Analysis of:Liquidity, Crime Woes Shake Up Chief Risk Officers | www.cfo.com

The current situation of non availability of credit is leading to a position where Chief Risk Officers and CFO's will have a difficult time in funds management, meeting profitability targets and running a business. Funds constraints  will make it difficult to extend credit to customers when financial institutions and creditors are making credit vanish. Such a situation may also lead to conditions where accounts may be stage managed simply to keep creditors at bay. In this analysis I look at the peculiar conditions which I expect to come to play in the coming years and suggest that better control systems need to be in place not just in organizations but also in the wide spread global capital village.

Cost of Capital - The Formula Which No Longer Makes Sense In A Changing World

May 27, 2009

Analysis of:A Losing Formula | www.cfo.com

The financial world is changing and undergoing metamorphosis. Companies like GM and Chrysler are insolvent. Stock indices gyrate for no reason. Financial giants regularly go bust these days - so it seems. In this scenario what we have is a situation where the basic formulae for computing the cost of capital and such basics as beta and delta are becoming misleading. It is just not possible to calculate the systematic risk attached to a market or the unsystematic risk of a security. In this analysis I look at where this confusion is heading and how we may soon see a sea change in the way in which financial costs based on accounting statements are calculated.

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