Accountants Round Up

"We Need Honest Accounting"

By James S. Chanos: Mark-to-market (MTM) accounting is under fierce attack by bank CEOs and others who are pressing Congress to suspend, if not repeal, the rules they blame for the current financial crisis. Yet their pleas to bubble-wrap financial statements run counter to increased calls for greater financial-market transparency and ongoing efforts to restore investor trust.

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Source: The Wall Street Journal, 23 March 2009. Copyright ©2009 Dow Jones & Company, Inc. All rights reserved. 

"FASB Moves Toward Giving Banks More Flexibility on Fair-Value"

By Ian Katz: The Financial Accounting Standards Board, pressured by lawmakers to change the fair-value rule blamed for worsening the financial crisis, proposed permitting companies to use “significant judgment” in valuing assets.

Companies would be able to apply the revised rule to their first-quarter financial statements, FASB Chairman Robert Herz said today during a meeting at the U.S. accounting rulemaker’s Norwalk, Connecticut, headquarters. The board is set to vote on the proposal April 2, after a 15-day public comment period.

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Source: Bloomberg.com, 16 March 2009. © 2009 Bloomberg L.P. All rights reserved.

"Accounting Relief Hope May Limit Toxic Asset Sales"

By Reuters: Banks and insurance companies may hold off selling troubled assets into the U.S. Treasury public-private funds on expectations they will get relief from changes in accounting rules, according to Amherst Securities Group.

Proposed changes to rules that require assets be revalued each quarter would allow market-related losses to be recorded separately from credit losses, the analysts said.

Read complete article Accounting Relief Hope May Limit Toxic Asset Sales
Source: Thomson Reuters, 27 March 2009. © Thomson Reuters 2009. All rights reserved.

"Standard Setters Seek Swift Solution To Financial Crisis"

By Paul Grant: The International Accounting Standards Board and its US counterpart FASB met in London this week to thrash out a work plan that could reduce the severity of the economic downturn cause by the banking crisis.

Both boards agreed to work ‘jointly and expeditiously’ on a series of initiative in areas that have been highlighted as causes for concern. These include off-balance sheet activity, the accounting for financial instruments and loan loss accounting.

Read complete article Standard Setters Seek Swift Solution To Financial Crisis
Source: AccountancyAge, 25 March 2009. © Incisive Media Ltd. 2009 Incisive Media Limited. All rights reserved.

"Lighten Up Capital Requirements Not Accounting: Chanos"

By Natalie Erlich: Suspending regulatory capital requirements is more viable than adjusting mark-to-market accounting rules and therefore a better way of approaching the ongoing financial crisis, said James Chanos, Kynikos Associates president & founder.

“It’s much easier to do that globally than to tinker with everybody’s books,” he said.

Read complete article Lighten Up Capital Requirements Not Accounting: Chanos
Source: CNBC, 24 March 2009. © 2009 CNBC, Inc. All rights reserved.

"Melancon Speaks Out On Top Accounting Issues"

By Bill Carlino: American Institute of CPAs’ president and chief executive Barry Melancon reiterated his organization’s stance that fair value accounting was not a primary cause of the current economic distress and that the private sector — rather than Congress — should continue to set accounting standards.

“We don’t believe fair value accounting to be the cause of the economic situation we’re in. We believe it aids transparency.”

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Source: WebCPA, 12 March 2009. © 2009 WebCPA and SourceMedia, Inc. All rights reserved.

"'Mark to Market' Rule No Asset to Banks' Health"

By Michael Hiltzik: Given the degree to which the angst and anger about the economy is based on the public's confusion about the financial world -- just what is a "retention bonus," anyway? -- this might be the right moment to focus on something simple.

Yes, I'm talking about bank accounting.

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Source: Los Angeles Times, 23 March 2009. Copyright 2009 Los Angeles Times. All rights reserved.

"Oust the SEC as Sole Accounting Watchdog?"

By Marie Leone: Politics are creeping into accounting once again. This time it's through a proposed law that would replace the Securites and Exchange Commission as the sole overseer of accounting standards, and turn that role over to a high-level group that would let bank regulators have a say in approving accounting rules.

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Source: CFO, 10 March 2009. © CFO Publishing Corporation 2009. All rights reserved.

"Small Businesses in Crisis Turn to Accountants"

By WebCPA staff: The economic crisis is prompting more and more small-business owners to turn to their accountants for advice, according to a new survey.

Nearly 80 percent of the small-business owners said that they would feel more confident having an accountant as a close business advisor during this time.

Read complete article Small Businesses in Crisis Turn to Accountants
Source: WebCPA, 19 March 2009. © 2009 WebCPA and SourceMedia, Inc. All rights reserved.

"Mark-to-Market Accounting: Scapegoat for the Failure to Properly Regulate Banks"

By Tom Selling: The congressional hearings on "market-to-market accounting" are scheduled to begin in a few hours. I shudder at the prospect of financially-illiterate congressmen becoming putty in the hands of savvy lobbyists bearing gifts.

My concern was piqued by Steve Forbes' latest error-filled epistle sans data, which the Wall Street Journal rashly deigned to publish last Friday. I fear that it is a microcosm of what will unfold in the hearings: that mark-to-market accounting will become the scapegoat for practically the entire financial crisis.

Read complete post Mark-to-Market Accounting: Scapegoat for the Failure to Properly Regulate Banks
Source: The Accounting Onion, 11 March 2009.