All GLG News Analyses Filed Under: Accounting Regulatory Bodies

Nitish GroverPrincipal, OwnerNitish Grover and Associates

FIN 48 - A look at the concerns and the possible problem areas

May 21, 2007

Analysis of:Will FIN48 spark state tax scrutiny | www.cfo.com

FIN 48- An  amendment  of  SFAS 109  has  been in  the  news  ever  since  it  was  issued  last  year. The  effects  are  being  felt  only  now. SFAS 109  is  probably  the  best  gift  that  the  FASB  could  have  given  tax  authorities  across  the  globe. The  referred  article  speaks  of  the  possible  bounty of  FIN 48  for  state  taxation  authorities. This  analysis  looks  at  the  far  reaching  implications  of  this  amendment  of  SFAS 109.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

SFAS 154 - IAS 8 - Accounting Restatements Conundrum - Convergence of Accounting Standards - Implications for Analysts

April 9, 2007

Analysis of:SFAS 154 - Accounting Changes and Error Corrections | www.fasb.org

A  number  of  companies  have  in  the  recent  past  been restating  financial  results. This  creates  confusion  in  the  minds  of  investors, analysts  and  others  as  to  the  reason  for  restatement. Considering  the  recent  backdating  phenomenon  on  account  of  stock  options,  the  term  restatement  has  got  a  bad  reputation.

SFAS 154  attempts  to  differentiate  restatements  for  different purposes  and  at  the  same  time  achieve  convergence  with  IFRS. This  analysis  takes  a  look  at  the  convergence  of  SFAS 154 and  IAS 8  and  its  implications.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

FIN 48 - Implications for Indian Operations of Companies reporting under US GAAP

March 27, 2007

Analysis of:FIN 48A - Proposed FASB Staff Position | www.fasb.org

FIN 48 - an  amendment  of  SFAS 109  has  caused  enough  trouble  for  all  those  concerned  with  corporate  financial  reporting. Its  provisions  are  simple  yet  far  reaching  in  scope. The  simplicity  of  its  provisions  and  the  more  likely  than  not  criterion  have  evoked  considerable debate.

The  proposed  staff  position  to  amend  FIN 48  will  bring  a  certain  amount  of  clarity  to  the  term  settlement  and  and  the  timing  when  a  tax  liability  may  be  decided  as  settled. In  this  analysis  I  take  a  look  at  the  possible  effects  of  the  changes  and  the  impact  on  the  Indian  operations  of  a  company  which  follows  US  GAAP.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

SFAS 159 - IAS 39 - FAIR VALUE DISCLOSURE - CONVERGENCE USGAAP/IFRS - FINANCIAL INSTRUMENTS

February 20, 2007

Analysis of:SFAS 159 - THE FAIR VALUE OPTIONS FOR FINANCIAL ASSETS AND FINANCIAL LIABILITIES | www.fasb.org

The  FASB  is  on  a  convergence  juggernaut  and  confusing  the  landscape. The  latest  salvo  is  SFAS 159  which  seeks  convergence  with  IAS 39  Financial  Instruments:Measurement  and  Recognition. While  convergence  with  IAS 39  is  a  good  goal  yet  to my  mind  the  present  standard  only  confuses  the  issue.

This  analysis  looks  at  the  confusion  which  may  be  wrought  by  SFAS 159  and  why  to  my  view  the  opinions  of  two  of  the  FASB  members  who  dissented  from  the  issue  of  this  standard  are  very  relevant.

Paul MillerProfessorREGENTS OF THE UNIVERSITY OF COLORADO

No one wins when the truth isn't reported

October 6, 2006

Analysis of:FACTBOX-Retailers seen taking biggest hit from lease accounting | today.reuters.com

Lease accounting is living proof of the hypothesis that GAAP financial statements aren't useful. Shame on managers and their advisors who think they’re pulling a fast one on the markets by hiding the asset and the debt, and misrepresenting income.  And investors aren’t winning when they have to make and act on wild guesses when the financial statements don’t tell the truth.  Have no pity on financial institutions that promote leases because they make the statements look better.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Lease Accounting and effect on Credit Rating

August 4, 2006

Analysis of:FACTBOX-Retailers seen taking biggest hit from lease accounting | today.reuters.com

A  S&P  report  reviewed  at  http://www.cfo.com/article.cfm/7265491/c_7265603?f=home_todayinfinance  says  that  the  new  FASB/IASB  lease  accounting  project  will  not  effect  credit  ratings. 

In  my  view,  while  the  project  is   still  at   the  initiation  stage,  yet  it  would  definitely  impact  credit  ratings  of   companies. I  discuss  below  the  reasons  why  this  is  so.

Doomsday for Retailers

July 25, 2006

Analysis by: GLG Expert Contributor

Analysis of:FACTBOX-Retailers seen taking biggest hit from lease accounting | today.reuters.com

1. The FASB is considering changing the criteria for capitalizing leases.

This could significantly impact the retailing industry

Lease Accounting Changes Should Benefit All.

July 21, 2006

Analysis by: GLG Expert Contributor

Analysis of:FACTBOX-Retailers seen taking biggest hit from lease accounting | today.reuters.com

·Newspapers sell because they sensationalize headlines. Despite the headlines of the attached article the adoption of new lease accounting rules should not (as explained below) impact the share price nor the borrowing costs for retailers.

·These contemplated accounting change are long overdue, we can only hope that when issued it will make the rules easier to follow and will simplify rather than complicate the reading and comparability of financial statements.

·The FASB in its official news release on this topic stated The decision to add a leasing project, which will be conducted jointly with the International Accounting Standards Board (IASB), reflects the Boards concern that the current accounting in this area does not clearly portray the resources and obligations arising from lease transactions.  While this is true I hope that we are not headed down a path of fair valuing leases as that can lead to abusive accounting practices

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Leveraged Leases - The FIN 48 and FSP FAS 13-2 Effect

July 21, 2006

Analysis of:FACTBOX-Retailers seen taking biggest hit from lease accounting | today.reuters.com

The  FASB  has  alongwith  FIN 48  brought  in  Staff  Position  FSP FAS 13-2  which  amends  SFAS 13  on   Accounting  for  Leases. This  will  have  the  limited  effect  of   amending  the  accounting  rules  relating  to  leasing  in  so  far  as  they  effect  leveraged  leases  which  have  high  tax  benefits  in  the  early  years  which  decline  in  subsequent  years.

These  provisions  apply  mainly  in  relation  to  Lease  In  Lease  Out (LILO)  or  Sale In-Lease Out (SILO)   transactions  and  mainly  effect  the  liability  of   the  lessor. They  do  however  also  have  an  indirect  effect  on  the  lessee  which  is  the  reason  for  my  discussing  this  important  provision  here.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

FIN 48 - The Effect on Corporate Security Ratings

July 21, 2006

Analysis of:FASB Tax Rule Seen Aiding Rating Probes | www.cfo.com

FIN  48   is  the  latest  amendment  to  SFAS  109  -  Accounting  for  Income  Taxes. This  amendment  requires  companies  to  disclose  the  tax liability  where  the  company  is  not  atleast  50%  sure of  its  tax  position. Use of   a  valuation  allowance  is  not  permitted  for  this  purpose.

This  analysis  takes  a  look  at   the  possible  effects  of  FIN 48  on  corporate  securities  ratings.

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