Accounting "Rules"

Accounting Boards Revisit Rules on Booking Revenue .

Accounting rule makers went back for a second try at overhauling and simplifying the rules on when and how companies book revenue.

A new proposal on revenue recognition issued Monday would lead to changes for many companies in exactly when they can count the revenue they earn on their books. The joint proposal from the U.S.'s Financial Accounting Standards Board and the International Accounting Standards Board is similar in many respects to an earlier plan the rule makers issued last year.

"Revenue is the top line and it is important to every business," said IASB Chairman Hans Hoogervorst in a statement. "Our proposals will give analysts and investors the confidence that revenue is being presented on a consistent basis, across industries and continents."

Like the first plan, the new proposal is meant to create a single, unified method by which companies book revenue, and to align a company's counting of revenue with the transactions that generate it—the company's transfers of products and services to its customers.

That sounds basic and straightforward, but that isn't always the way it works under current rules. Sometimes a company must book revenue over time, because elements of its products are provided long after the initial purchase—repairs under warranty for a car or appliance, for instance, or upgrades on computer programs. Some industries, like software and construction, currently have their own special models for recognizing revenue.

Those special models would be eliminated if the proposal is enacted. Many companies will be able to book revenue sooner, instead of drawing it out over time, but others will see the opposite—some revenue they currently book up front will have to be deferred. Companies would still recognize the same total amount of revenue over time, however.

http://online.wsj.com/article/SB10001424052970204323904577037942485727080.html?mod=googlenews_wsj

some this, some that, nothing changes. The companies pretending to fail will be the ones that take the hit.

MF Global Accounting

An accounting technique used by MF Global Inc., the failed broker-dealer, is being reviewed by the U.S. Securities and Exchange Commission, agency Chairman Mary Schapiro said.

The SEC is in talks with the Financial Accounting Standards Board about “repurchase-to-maturity” agreements that MF Global used in off-balance-sheet accounting, Schapiro said yesterday during a hearing before the U.S. Senate Agriculture Committee in Washington.

Schapiro said the agency was talking with FASB about whether more disclosure is needed. The agreements used by MF Global are the only type of repurchase agreements that can be used off balance sheet, she said, speaking alongside Commodity Futures Trading Commission Chairman Gary Gensler.

Both the SEC and FASB also are looking into whether the methods MF Global used to account for its investments in European debt were legal.

http://www.businessweek.com/news/2011-12-02/mf-global-accounting-bank-state-aid-u-k-loans-compliance.html

Its always blamed on the accounting. I am in that field and my take on it is...most dont even understand it, so who is going to dispute that it was or wasnt to blame? Keep the hens confused.

totally confusing..

Accounting Board Finds Faults in Deloitte Audits

Inspectors for the government's audit-oversight board found deficiencies in 26 audits conducted by Deloitte & Touche LLP in its annual inspection of the Big Four accounting firm.

The report from the Public Company Accounting Oversight Board, released Tuesday, said some of the deficiencies it found in its 2010 inspection of Deloitte's audits were significant enough that it appeared the firm didn't obtain enough evidence to support its audit opinions.

The 26 deficient audits found were out of 58 Deloitte audits and partial audits reviewed by PCAOB inspectors. The inspectors found that, in various audits, Deloitte didn't do enough testing on issues like inventory, revenue recognition, goodwill impairment and fair value, among other areas. In one case, follow-up between Deloitte and the audit client led to a change in the client's accounting, according to the report.

The board didn't identify the companies involved, in accordance with its typical practice.

The report is the first PCAOB assessment of Deloitte's performance issued since the board rebuked Deloitte in October by unsealing previously confidential criticisms of the firm's quality control.

Deloitte said in a statement that it is "committed to the highest standards of audit quality" and has taken steps to address both the PCAOB's findings on the firm's individual audits and the board's broader observations on Deloitte's quality control and audit quality. The firm said it has been making a series of investments "focused on strengthening and improving our practice."

Last month, the board released its annual reports on PricewaterhouseCoopers LLP, in which it found 28 deficient audits out of 75 reviewed, and KPMG LLP, in which it found 12 deficient audits out of 54 reviewed. The yearly report on the fourth Big Four firm, Ernst & Young LLP, hasn't yet been issued.
http://online.wsj.com/article/SB10001424052970204879004577110922981822832.html

Olympus Prez to resign after accounting fraud of $1.7 billion

An Olympus Corp panel plans to recommend the endoscope maker sue current and former executives for more than 90 billion yen ($1.2 billion, 777.5 million pounds) in scandal-related damages, and its president, Shuichi Takayama, is expected to resign by the end of the month, media reported on Sunday.

The panel, which is expected to make an announcement later on Sunday, determined that Takayama and five other current company executives had breached fiduciary duty by not spotting a 13-year accounting fraud that hid losses of $1.7 billion and thinned out the 92-year-old firm’s net assets, Kyodo News Agency said.
http://www.firstpost.com/world/olympus-prez-to-resign-after-accounting-fraud-of-1-7-billion-175354.html

thirteen year fraud! who the hell was signing off on that audit report?

haha

Disruptions: With No Revenue, an Illusion of Value
http://bits.blogs.nytimes.com/2012/04/29/disruptions-with-no-revenue-an-illusion-of-value/#

The gears of Silicon Valley continue to mesh and turn because of money, not necessarily technological innovations. And there are certain things about that money machine that denizens of the Valley would rather keep quiet.

First, they’ll never acknowledge the possibility of a bubble. “Bubble? Ha!” venture capitalists often tell me. “Silly reporter, there is no bubble.”

Chesapeake Tangle Goes Far Beyond CEO
http://www.slate.com/blogs/breakingviews/2012/04/27/chesapeake_tangle_goes_far_beyond_ceo.html

Questions about Chesapeake Energy go beyond its chief executive’s dubious dealings. Aubrey McClendon’s personal stakes in oil and gas projects and the extent of related disclosure have put the $12 billion U.S. energy giant on the back foot and tied its board in knots. But investors should also be wary of the company’s monstrous complexity. It has convoluted off-balance sheet liabilities thanks to convoluted partnerships; hedging gains have dwarfed profit since 2006; and cash flow is consistently negative.

How do you spell relief ? B.A.I.L.O.U.T.

Groupon Plunges as Board Members Leave
http://www.thestreet.com/story/11514049/1/groupon-plunges-as-board-members-reportedly-leaving.html

NEW YORK (TheStreet) -- Groupon(GRPN_) shares plunged on Monday as two members of its board, including Starbucks(SBUX_) CEO Howard Schultz, resigned.

"With their deep financial, accounting and operational experience, Dan and Bob will provide invaluable expertise to the Board going forward," said Eric Lefkofsky, Groupon Chairman.

How Zynga, Facebook and Groupon's Go-To Auditor Rewrites Accounting Rules
http://www.forbes.com/sites/francinemckenna/2012/04/23/how-zynga-facebook-and-groupons-go-to-auditor-rewrites-accounting-rules/3/

[quote]Confused yet? Zynga’s investors surely are. And as long as firms like E&Y have wide latitude to judge the accounting rules at companies where they legally may have created such creative structures, rest assured that such confusion will grow as rapidly as FarmVille’s virtual kudzu.[/quote]

Is Wells Fargo a Lehman in the Making?
http://www.nakedcapitalism.com/2012/05/is-wells-fargo-a-lehman-in-the-making.html

Whalen argues that Wells will take a hit when Basel III is implemented because banks will no longer be able to afford to retain mortgage servicing rights.

interesting..