All GLG News Analyses Filed Under: Accounting Regulatory Bodies
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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The Beginning of the End of the FASB
May 13, 2008
The Beginning of the End of GAAP | www.cfo.com
The title of the article is a misnomer - it is the FASB not GAAP that is being replaced. With little debate or scrutiny, and no cost/benefit analysis of which I'm aware, the SEC has decided to replace United States GAAP with that of an international body over which it has no control. Accounting is the basis of business decisions and to outsource that authority is frightening to say the least.
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IFRS and US GAAP - Convergance Difficulties
May 12, 2008
The Beginning of the End of GAAP | www.cfo.com
1. Given all of the differences between US GAAP and IFRS it will be a few more years before convergance occurs. 2. There is a lack of conformity with respect to adherance to IFRS as it has been promulgated into law. As such, it is difficult to review a financial statement completed under IFRS unless you know the underlying accounting policies promulgated by a specific governmental authority. 3. Bank assets (loans) and derivatives continue to be a matter of controversary in the IFRS world. 4. The SEC will continue to push for convergance. It is probable that IFRS will move closer to US GAAP, especially with respect to providing more descriptive disclosures. Re-valuation of current assets and the disallowance of deferrred tax assets will also cause major issues with respect to accepting IFRS in the US. Asset impairment is an area where great improvement must occur for acceptance by the FASB.
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May 5, 2008
SEC's Atkins Calls for Fair-Value Guidance | www.cfo.com
1. Something is clearly worth nothing when nobody wants to buy it, e.g., Bear Stearns price went from $58/share to zero. 2. Option pricing theory tells us that the equity in a firm functions as a long-term option. Clearly, Bear Sterns "American-style equity option" was clearly out-of-the-money. 3. However, without Bear Stearns the whole financial system could possibly unravel and the Fed leaned on JP Morgan's surgeons to electro-shock the dead patient into live at $10/share.
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Nitish GroverPrincipal, OwnerNitish Grover and Associates
US GAAP and IFRS - Convergence - A Look at Some Issues
May 5, 2008
The Beginning of the End of GAAP | www.cfo.com
As the global accounting convergence process progresses a number of contentious issues are being raised. This analysis takes a look at some of these issues.
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Robert McCabePartnerMcCabe & Associates, PhDs
Could something be clearly worth zero?
April 28, 2008
SEC's Atkins Calls for Fair-Value Guidance | www.cfo.com
How can an SEC Commissioner who is obviously not familiar with Fair Value estimates call for changing the existing guidance? The value of something is zero if that is what you can buy and sell it for.
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Nitish GroverPrincipal, OwnerNitish Grover and Associates
April 4, 2008
Reducing Complexity in Reporting Financial Instruments | www.fasb.org
The concept of fair value, value in exchange, risk measurement and the evolution of new derivative instruments continue to confound the initiated and the beginner. In this concept the FASB has decided to approach the context and concept of fair value in a piecemeal manner so as to approach a meaningful solution in a graded manner. In this analysis I take a look at this approach and why fair value will continue to make accounting statements misleading for some time to come.
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Ronald KiimaPresident Kiima Incorporated
Bush Nominates Two Democrats to SEC: More of the Same is Likely
March 31, 2008
White House to Tap Two Dems to SEC | www.cfo.com
Will President Bush's recent nomination of two Democrats to the SEC make it more investor friendly? Not likely!
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Robert KempProfessorUniversity of Virginia - CC
Derivatives - More Disclosure Is Always Better for Financial Analysts
March 27, 2008
Statement of Financial Accounting Standards 161 | www.fasb.org
1. Value is defined by risk. Risk deals with uncertainty of the future. How a firm manages risk is a major determinant of its value. 2. Accounting standards are dedicated to reporting the past. Given it is the past, there is little risk or uncertainty regarding such events. Merely reporting the past does not give the financial analyst the insights needed. 3. FASB 161 tries to bridge this gap between past/present and the future. It attempts to make management disclose intent. It attempts to answer the following question: "How will current actions and positions affect future performance?"
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Nitish GroverPrincipal, OwnerNitish Grover and Associates
March 24, 2008
Statement of Financial Accounting Standards 161 | www.fasb.org
The FASB has proposed major changes to SFAS 133 which deals with accounting for derivatives. The changes relate to disclosures in terms of qualitative aspects, better reporting formats and risk disclosures of derivative instruments. In this analysis I look at the major pathbreaking changes being brought about by SFAS 161. In the context of the existing crisis effecting the financial markets these changes are really pathbreaking.
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Nitish GroverPrincipal, OwnerNitish Grover and Associates
December 13, 2007
AMD Warns of Material Goodwill Charge | www.cfo.com
AMD has just announced that it will take a material charge on account of goodwill while Unify Corporation has also stated that it will restate its results on account of errors in accounting for goodwill. The FASB has revised SFAS 141R and requires companies to follow fair value accounting for goodwill on year to year basis. Also negative goodwill and bargain purchases is to be immediately recognized.Considering that goodwill accounting involves valuing value of the minority or non-controlling interest this creates problems. This analysis looks at some of these aspects.
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