GLG News by Mr. Nitish Grover FCA, AICPA Intl Associate, Principal, Owner
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The Mortgage Giant Takevover and Global Capital Markets - Implications
September 9, 2008
US Unveils Takeover of Two Mortgage Giants | www.nytimes.com
Nothing fails like failure - thats what has happened to the mortgage giants. Fannie and Freddie have become so important to the stability of global and american financial markets that the possible failure of these institutions just had to be checked. In my analysis below I argue that the federal takeover of Freddie and Fannie will not improve the loan portfolios or values of derivative instruments dependent on loans. What is needed is a different kind of systemic response. Global capital markets will probably continue to be in continuous gyration with a emphasized tailspin.
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The Evolving Credit and Loan Cycle - What will be the effects of Fed Monetary Policy?
September 1, 2008
Loan Rangers - Private Equity and Banks | www.economist.com
The effect of Federal monetary policy in the the present economic crisis is undisputed. In this analysis I look at what will be the effects going forward of the effects of this policy and whether the economic value of assets will witness a positive impact. Also what will be the accounting implications of the changes in monetary policy.
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Risk Modeling and Financial Returns
August 22, 2008
Risk Models | www.glgroup.com
The measurement of value at risk in financial modeling is a generic concept and has existed since time immemorial - even before the current sophistication set into financial decision making starting around 50 years back. In this analysis I take a look at the various inputs which go into the construction of a valuation model for financial instruments.
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Risk , Uncertainty and Earnings - The age old paradigms
August 13, 2008
Risk is hated universally | economictimes.indiatimes.com
Risk and uncertainty are two different paradigms. When analysts and decision makers do not measure risk properly then it becomes uncertainty. In this analysis I take a look at the effect on earnings of both risk and uncertainty and how they effect the financial statements.
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Accounting, Risk Mangement , Inflationary Fears and Central Bank Policy - A Look at Some Aspects
August 11, 2008
Inflation Fears Persist as Fed Holds Rates | www.ft.com
Confused Central Banks are making risk management confusing while making it difficult to value derivatives and evaluate the impact of hedging strategies. As a result accounting is becoming more complex especially in relation to the manner in which assets and liabilities are required to be valued in relation to annual financial statements. This analysis looks at some of the concepts involved in this paradigm.
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Fair Value vs Historical Cost - A Look at some Aspects of the Debate
August 4, 2008
Mulling the Fair Value, Historic Cost Choice | www.cfo.com
The debate on the use of fair value seems to get more complicated with each passing day. Also the use of fair value for some balance sheet items and for historical cost for other items simply complicates the way in which financial information is presented.The FASB has now prepared a report which recommends that fair value/historical cost be used consistently for a particular business activity. In my opinion this only complicates the issue without simplifying anything and I look at the same in this analysis.
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Economic Recession, WTO, Fair Value and Accounting Restatements - The Coming Conundrums
July 21, 2008
Fed Chief Bleak on Economic Outlook | www.nytimes.com
The global economy is today caught in a quagmire. The WTO talks are stumbling. Securities markets don't know which way to go. Each day comes with a new piece of news which is difficult to fit in the jigsaw. Economic recession with inflation has hit several parts of the globe. The problems of Fannie Mae and Freddie Mac are the latest to hit the headlines. In this analysis I take a look at how these events are reshaping accounting and why we can expect further confusion in accounting statements.
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The Banking Scenario - Subprime Accounting Issues - Basel II - Changing Regulatory Landscape
July 15, 2008
Fed Calls for Tighter Regulation of Banks | www.ft.com
The Federal Reserve wants more supervisory and control powers over banks while saying that banks should be allowed to fail. Basel II guidelines are around the corner. It is a moot point as to what extent these will add to the stability of the financial system till the banks learn to first manage their own risk portfolio. In this analysis I look at the changing regulatory landscape in relation to evolving accounting issues and where we could possibly be heading.
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July 1, 2008
Fed sits tight as ECB chief signals rate rise | www.ft.com
Economic policy globally is today focused on inflationary concerns combined with keeping the growth momentum. The subprime crisis has amply demonstrated that the creation of wealth is fast turning towards the negative zone especially with the number of funds under pressure on account of declining household ability to service debts taken for wealth creation.
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Convergence of Accounting Standards - Good, Bad or Ugly?
July 1, 2008
FASB Agenda Takes on Global Spin | www.cfo.com
A lot has been written about the convergence of accounting standards over the last few years. The bandwagon also moves on. There are however major stumbling blocks. In this analysis I look at whether Convergence will be good, bad or ugly?
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June 18, 2008
Hedge Accounting : Caging the 800 page gorilla | www.cfo.com
The FASB proposes to do a complete revamp of SFAS 133 and all the associated baggage that goes with it. The standard itself is so complicated that I wonder if it can really be revamped. In this analysis I look at whether accounting can be less complicated than its instruments - because hedge accounting is completely dependent on the nature of instruments associated with it. Also the nature of FASB standards tend to go in detail rather than concept - ergo it may not be possible to really revamp the standard.
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The relevance of Internal Audit in Financial Statement Presentation
June 13, 2008
Internal Audit Comes of Age | www.cfo.com
Internal audit, risk measurement and compliance are getting more and more intermeshed. The realization is increasing that effective internal audit is relevant for improving operational efficiency. In this analysis I look at the importance of internal audit and how the field is fast changing so as to improve operating profitability and reduce operating risk. In the context of the fast changing economic situation also I look at how an effective internal audit could have helped institutions escape much of the pain of the subprime crisis.
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The Fair Value Contribution to Understanding the Subprime Imbroglio
May 28, 2008
The Role of Fair Value in the Subprime Mortgage Metltdown | www.aicpa.org
The referred article gives three different expert perspectives on fair value. In this analysis I look at what drives fair value and why fair value accounting applied on a consistent basis can help avoid poor financial reporting.
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High Oil Prices - Earnings Quality - Hyperinflationary Situations
May 27, 2008
Economic Toll Mounts From High Oil Prices | www.nytimes.com
The mortgage crisis, the hyperinflationary oil prices and gyrations in securities markets apart from the errors by rating institutions point to a coming metamorphosis in the presentation of accounting statements. Accounting literature gives little guidance on how to present financial statements in accordance with inflation. The only little bit of guidance that exists to my knowledge is SFAS 89 and IAS 29. In this analysis I look at some of the challenges facing the accounting profession in this confusing time of economic upheaval, confused monetary policy and rising prices.
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May 19, 2008
Some facts about fair value | www.fasb.org
This analysis takes a look at the issues involving fair value. While fair value is becoming increasingly relevant yet it raises several problems and complicated issues. The FASB and IASB alongwith all major accounting bodies are aggressively promoting the concept of fair value. In this analysis I take a look at some of the issues involved.
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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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Banking and Subprime Crisis - Citigroup - Global Implications for financial markets
May 5, 2008
Citifin sacks 400, bank plans $1bn loan selloff | economictimes.indiatimes.com
The subprime crisis started in America but has stinged and burned financial institutions and businesses the world over. The referred article speaks of downsizing and sell off by Citigroup at CitiFinancial - a retail loan supermarket in India for high interest loans in India. In this analysis I look at some parameters of how the subprime situation is correcting itself and what in my opinion is to be expected in terms of effects on accounting, mergers and earnings quality as a result of the present subprime imbroglio.
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Accounting Education - Repeated Financial Crisis - A Personal View on What Ails Accounting Education
April 15, 2008
What's Missing in Controller Education | www.cfo.com
As the rate of growth of economies the world over grows so does the frequency of failures and shortcomings in global and national financial markets. In this analysis I take a look at the role which the nature of financial training and education plays in these repeated unhealthy financial cycles.
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Convergence of Accounting Standards - Not as Simple as it Appears - Many Milestones to Go
April 7, 2008
Goodbye GAAP | cfo.com
The Convergence bandwagon marches on. Just as we today have metric standards in the area of physics so accounting standards will converge - but not fully. The point here is that accounting is evolving at a fast pace. As economies change new methods of accounting evolve. Inventory accounting has evolved over the years. Accounting for fixed assets, construction contracts, specialized industries like oil and gas and film production are all subject to different rules in different areas of the globe. So in that sense US GAAP will not disappear.
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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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