All GLG News Analyses Filed Under: Accounting Issues

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Relevance of Actvity Based Costing in Evaluating Corporate Performance

November 8, 2007

Analysis of:Time Driven Activity Based Costing | papers.ssrn.com

Activity based  costing  has  made major strides since it  was introduced nearly 20 years ago into the mainstream of accounting and  cost  analysis. ABC  analysis  has  however not yet  made  much  of  an  inroad  into assessing  the  quality of  corporate profits. In  this  analysis  I  look  at  how  ABC  can  be  used  for  assessing  corporate performance

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Subprime Crisis - Valution and Risk Conundrums - Accounting Perspective

November 5, 2007

Analysis of:Credit Crunch has Accounting Bite | ifrs.pwc.com

The  referred  article refers to the valuation and risk  disclosures to be made  by  companies  and  financial  institutions. In this  analysis  I  look  at  the  problems  facing  companies  as  they  undertake  to  finalize their  accounts  and  the  kind  of  risk and disclosure  conundrums  that they may  face in this  regard.

A Billion Here, A Billion There ...

October 26, 2007

Analysis by: GLG Expert Contributor

Analysis of:The Recent Financial Turmoil and its Economic and Policy Consequences | www.federalreserve.gov

1. Many financial institutions are reporting losses related to valuation problems. 2. Institutional investors are on the hook to properly vet external asset managers. This includes asking tough questions about their valuation processes.

Auditors, don't get fooled again...The Fed, Treasury and the Taxpayer Funded Superfund BAILOUT

October 23, 2007

Analysis by: GLG Expert Contributor

Analysis of:Fed Signals Support for Paulson Commercial-Paper Plan | www.bloomberg.com

But the superfund SIV that will be funded by the “banks” is bunk, and will be done as follows. 1)The Banks are thin on liquidity 2) The bank CPA and auditors said to them 2 weeks ago, “we are not going to roll over, you need to address these SIV’s, your commercial paper, or I will not sign your annual report…we got burned by Enron, not again…” 3)Paulson brings the Banks and auditors all together and says, “Lets make a $100bln in a bucket, so you can dump your garbage CDO's, CP, and other junk in there, and we will skirt the auditors pencils” 4) The banks say to Paulson, “We’re broke and thin on capital…brother can you spare a dime?”

Nitish GroverPrincipal, OwnerNitish Grover and Associates

IFRS - US GAAP - The steamship gathers speed at a global level

October 22, 2007

Analysis of:Concept Paper on Convergence of IFRS | www.icai.org

The  accounting  standards  convergence  steamship  is  gathering  speed  at  an  accelerating  pace  and  emerging  markets are  embracing  the  same. In  this  context  the  initiative  in  India  to  fully  embrace  IFRS  by  2011  should  be  seen  in  the  context of  the  FASB-IFRS  convergence  project. In  this  analysis  I  look  at  convergence from a  global  accounting  standards  perspective  and  the  implications  for  investors  and  companies  based  outside  India  and  especially  in  the  United  States.

Accounting Standards-Internationalization

October 19, 2007

Analysis by: GLG Expert Contributor

Analysis of:IASB Warns Europe on Accounting Standards | www.ft.com

A standard is meant for an acceptable content presented in a specified manner for better understanding. Professional bodies tend to elicit views of their members' analyse and format the majority opinions into a document which is then termed as Standard. There are two issues according to me:- Issue A 1. Different bodies assume that what that body by majority agrees should be the standard not only for that body but also to be universal 2. The environment in which different bodies work is different and views of one body need not necessarily be that of others.  Issue B 1. All of us resist change and resist more when that is thrusted by another (Others) 2. A creative mind always look for something new The multiplicity of Standards, like Accounting standards and International Accounting standards, IFRS, etc., only creates more of resistance. What is really required is the conrtent and not the format. A simple format which encourages more voluntary disclosures will be practical.

IFRS future in the hands of politicians, bureaucrats and accountants

October 18, 2007

Analysis by: GLG Expert Contributor

Analysis of:IASB Warns Europe on Accounting Standards | www.ft.com

If the politics around international accounting standards does not subside in the near future this will prove detrimental to the development of standards for providing a true and fair view on the performance of public companies across the globe. If the bickering continues, this will also give an easy opt out for FASB and US companies from adopting IFRS. Their view will be that IASB, and consequently IFRS, is not a mature enough platform to converge since the first major adopter (i.e. EU) is having second thoughts.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Standards Convergence - Divergences of Opinion - Where do we go further

October 18, 2007

Analysis of:IASB Warns Europe on Accounting Standards | www.ft.com

All governments are wary of the power to lose control.So it is with accounting standards. While the US is moving closer to convergence with IFRS, Europe is adopting a divergent trend as is apparent with the efforts in the area of IAS 39 - Financial Instruments and IFRS 8 - Segment Accounting. In this analysis I take a look at this phenomenon and where it is heading.

Analyzing Inventories for Warning Signals and Red Flags

October 8, 2007

Analysis by: GLG Expert Contributor

Analysis of:12/31/06 10-K for Flowserve Corporation (FLS) | sec.gov

This post specifically discusses some key potential risks with inventories on the balance sheet that are common across a broad base of companies. The "Analysis" section below gives several recommended tips and techniques for investors on how to analyze inventories for these specific risks.  A quick "case study" on Flowserve Corporation (FLS) is also provided.   

Receivable Securitization and Factoring Programs – A Common Cash Flow Manipulation Technique

October 4, 2007

Analysis by: GLG Expert Contributor

Analysis of:3/31/07 10-Q for Burlington Northern Santa Fe Corporation (BNI) | sec.gov

This post specifically discusses a common cash flow manipulation technique involving receivable securitization and factoring programs.  The "Analysis" section below provides some actual public company examples of how operating cash flow can be impacted and gives several recommended steps on how to analyze if a company is engaging is such activities.

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