GLG News by Mr. Nitish Grover FCA, AICPA Intl Associate, Principal, Owner
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Lease Accounting and the FASB-IASB Convergence Project
January 4, 2010
Balance Sheet Blues | www.cfo.com
A new thinking on accounting for leases appears to be emerging. Don't think of operating and financial leases. Instead think of right to use. Record the right to use as an asset and the future payments as a liability. In this analysis I draw attention to some of the possible ramifications of the same on financial statement presentation and the leveraging effect.
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The Effect of Samuelson's Economics on my writing - A Personal Tribute
December 27, 2009
Economics Focus:Paul Samuelson | www.economist.com
Like many other students I have read and been guided by Samuelsons Textbook on Economics. I personally used the 10th Edition sometime in the late seventies. That book guided my understanding of Economics and also Financial Management to a great extent. This short analysis is a tribute to that great teacher who many like me never had the good fortune to meet yet were guided by his thoughts.
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Dubai Debt - Accounting, Economics, Islamic Banking and the Rules of Finance
November 29, 2009
RBI to ask banks about their exposure in Dubai World | economictimes.indiatimes.com
The Middle Eastern countries and Islam do not believe in interest -money is not an asset and cannot have a cost (interest). It can only be traded in relation to some commodity. The present crisis has shown that if a cost is not attributed to money then the result is a crisis. In this analysis I look at the effects of the Dubai debt crisis in relation to accounting rules.
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The Fair Value Debate - The Political Imperative - A Exercise in Futility?
November 19, 2009
Accounting Rules:Divided and Overruled | www.economist.com
Fair value has been in the news for sometime. Also banks are now complaining and so are regulators and politicians. The convergence issue and the impact of a far off standard setter not subject to local influence is having its effects on the debate. In this analysis I look at why fair value should not be influenced by those not well conversant with the subject. While I agree that accountants alone should not influence the debate yet the undue influence of politicians should be avoided.
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The Economic Downturn and Revival - Challenges for Accountants and Auditors
November 12, 2009
Failed financial firms:The bust that worked | www.economist.com
The referred article speaks of the bankruptcy reorganization plan of one Institution. In this analysis I take the referred Institution as a referral point to examine/highlight the challenges which accountants and auditors will face in their stewardship and attest function.
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Accounting and The Gold Price - Fair Value - Valuation Problems to be Expected
November 4, 2009
Gold Price Tops $1090 for First Time | economictimes.indiatimes.com
As the price of gold rises on a week on week basis one can expect to see ramifications in the accounting arena. There are a number of investment products sold in the market which are linked to the price of gold and its physical holding. In this analysis I look at the nature of problems to be expected - especially in relation to fair value disclosures.
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Working Capital - Internal Audit and Control - Accounting Standards
October 30, 2009
A Crash Course in Working Capital | www.cfo.com
The referred Article speaks of the importance of working capital, internal audit and proper financial statement and how these interact to provide a proper business growth environment. In my analysis below I give my thoughts on these aspects.
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Offshoring - Changing Accounting Dynamics - Auditing and Control
October 8, 2009
The New Calculus of Offshoring | www.cfo.com
Increased overseas costs, security dynamics and the sudden availability of newly jobless employees has changed the offshoring dynamics. Offshoring continues but the repetitive tasks with high risk and control difficulties are getting out of the offshoring matrix. In this analysis I look at the effects of these changing dynamics in relation to auditing and control factors.
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Central Bank Policy - Gold - Dollar - Accounting and the Gold Standard
October 8, 2009
Central Banks in Europe Hold Rates Steady | www.nytimes.com
The policy of Central Banks over the last year has left the monetary system in a state of limbo. The value of the dollar in terms of bullion and other commodities is taking a beating. The increasing value of gold in currency terms reminds one of the days of the gold standard and the benefits of having gold as a store of value. In this analysis I take a look at how this increasing value of gold may effect internal controls and corporate financial policies.
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Business Cycles, Legislation and Accounting - Where will it Lead?
September 15, 2009
For Obama, a Chance to Reform the Street is Fading | www.nytimes.com
The current recession is part of a business cycle. The reasons for the recession are several but then a trough after a long period of prosperity is to be expected. President Obama puts the blame on investment bankers and executives. There is also talk of legislation to limit further repeats. I wonder how this will impact accounting and in turn the figures on which financial decisions are made. In this analysis i present some of my thoughts on the subject..
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The Impending Changing Capital Structure at Banks - Challanges for Accountants
September 7, 2009
G20 Calls for Better Capital Buffers at Banks | www.ft.com
The G20 meeting has agreed that banks need to be properly capitalized with equity instruments as compared to hybrid debt-equity. A number of other changes in the capitalization of banks is also proposed. This would mean that debt instruments with characteristics of equity would have a bleak future in the capital structure of banks. In this analysis I highlight some of the issues involved in this conundrum.
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Global Debt Situation - Fair Value - Financial Statements - Paradigms
September 6, 2009
US says debt Outlook Worsening | www.ft.com
The global economy is in a tailspin. Politicians and economists like us to believe otherwise amid worsening job losses and a weakening US dollar. The graph of the USD vs. gold price shows the fall in value of the USD. This situation throws up questions for the auditor/CFO/accountant and others involved with financial statements. Analysts would also need to evaluate the fair value of assets on financial statements in this evolving situation. In this analysis I look at some of these questions.
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Tax Fudges and Financial Reporting - The Paradigm - Accounting Standards Context
August 25, 2009
Closing the Havens | www.ft.com
Tax havens have represented security against political repression for long. They have also with the evolution of tax laws become a pain for Governments. This is especially with the growth of acceptability of the right of the State to levy taxes. The recent developments with Tax Haven authorities agreeing to divulge confidential information raises questions for the accounting profession. In this analysis I look at issues that these developments raise for the accounting and auditing profession.
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CDS Regulation , Accounting and Economic Effects
August 16, 2009
Derivatives Plans Spark Doubts on CDS | www.ft.com
CDS have created problems for some time now. The proposal to regulate CDS over the counter sales will in my opinion create more problems than it will solve. This is especially in the context of the triple regulation suggested - SEC, CFTC and a dispute regulatory mechanism for the turf between the two bodies. In this analysis I look at the accounting and economic problems that this will create.
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Accounting Disclosures - FASB Moves - My Comments
July 29, 2009
FASB Initiates "Disclosure Framework" Project Aimed at More Useful, Organized and Consitent Disclosures | www.fasb.org
The referred FASB news release speaks of a new FASB project to simplify accounting disclosures and make them more meaningful. In this analysis I look at the relevance of such a major project in the realm of accounting and how this could make financial statements more meaningful.
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Serious Frauds and Internal Controls - A Look at Emerging Practices
July 23, 2009
Allegations of massive fraud in the gulf: A $10 billion Saudi Fraud Claim | www.economist.com
Surplus investment cash is always a problem. Loose internal controls and financial practices compound the problem. In the referred article there is an extensive discussion of how a large and respected Saudi conglomerate defaulted on financial commitments on account of frauds and lapses perpetrated ostensibly by a family member. In this analysis I look at why and how control practices are and will have to change in response to changing circumstances.
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A Season for Fraud - Possible Effect on Audit Quality and Audit Standards
July 15, 2009
Lawyer Sentenced to 20 Years in $700 Million Fraud | www.nytimes.com
As I read the referred article about a lawyer who was at the top of his profession being sentenced to 20 years for fraud and of other cases like Madoff et. all (including the cases over the last ten years) I think this is the season for frauds. Major frauds are being announced and uncovered in innovative ways including in two major cases by public announcement (Madoff and Satyam). In this analysis I take a look at how this "season for fraud" is going to impact audit quality, audit standards and also forensic accounting.
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Securities, Rating Agencies, Accounting, True Value and Fair Value - A Paradigm Look
July 14, 2009
SEC to Create Group to Check Rating Agencies | www.ft.com
The referred article speaks of the efforts of the SEC to monitor and police credit rating agencies. This is ofcourse a welcome proposal. However, it will also have an effect on accounting and the measurement of true value and fair value of securities. In this analysis I take a look at these aspects and how we can expect the rating business to change and also the manner in which values as associated with securities are measured.
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Charles Darwin, Adam Smith, Accounting and Financial Rules
July 13, 2009
The Invisible Hand, Trumped by Darwin | www.nytimes.com
The referred article speaks of Adam Smith and Charles Darwin. While Smith spoke of the invisible hand, Darwin spoke of natural selection and survival of the fittest. The referred article is in terms of economics. I look at the same question from an accounting and financial emphasis.
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Fair Value - The Continuing Debate - Why it Never Ends?
July 8, 2009
The Fair Value Deadbeat Debate Returns | www.cfo.com
The referred article speaks of fair value and its impact on credit rating. Fair value is related to a number of instruments including derivatives, hedging and plain vanilla instruments. I was recently at a conference in Agra, India where the Chairman of the IASB Sir David Tweedy mentioned IAS 39 in passing and said that the IASB was still trying to get to grips with its intricacies. In this analysis I look at why fair value will continue to confuse but is essentially the light in the right direction for understanding corporate financial reports.
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