GLG News by Accounting, Finance, and Tax Professors (US)

Anthony CatanachDirectorDI2 Associates, LLC

More Under Armour Red Flags...

November 20, 2009

Analysis of:Stock Jocks Punish Under Armour's Mathletes | www.cnbc.com

Under Armour's most recent 10K contains a number of financial reporting "red flags" that reflect a cavalier attitude toward financial reporting transparency.

Anthony CatanachDirectorDI2 Associates, LLC

What the Former SEC Chairmen Missed...

November 19, 2009

Analysis of:Don't Let Banks Hide Bad Assets | online.wsj.com

Conceptually, the arguments favoring fair value accounting are sound and quite appealing. Unquestionably, financial statement users will benefit from data about how a company’s assets and liabilities change in value during a reporting period. However, there are two major issues associated with fair value reporting that accountants, investors, legislators, and regulators need to address in the wake of our most recent financial crisis.

Anthony CatanachDirectorDI2 Associates, LLC

What Have the Accountants Done For Us Lately?

November 19, 2009

Analysis of:Systemic risk legislation threatens FASB’s independence | www.accountingweb.com

Debates about the causes of the recent financial crisis have yet to focus on the inability of financial institution independent auditors to provide adequate oversight over management’s valuations of financial instruments.

Thomas KleinManaging MemberKleinCPA PLLC

Obama Expected to Sign Generous NOL Carryback Bill on Friday

November 5, 2009

Analysis of:Congress Passes Unemployment Bill With Tax Items | www.journalofaccountancy.com

On Thursday, Congress sent a bill to the White House containing enhanced net operating loss (NOL) carryback opportunities for most companies. The bill contains a provision extending the NOL carryback period from two years to five years for losses incurred in 2008 or 2009. President Obama is expected to sign the bill on Friday which would result in the immediate filing for refunds by many companies.

Thomas KleinManaging MemberKleinCPA PLLC

Obama Administration Moves Foreign Earnings Tax Deferral Reform to Back Burner

October 13, 2009

Analysis of:Business Fends Off Tax Hit | online.wsj.com

Once again, a proposal to reform how a U.S. based multinational company's foreign earnings are taxed has failed to gain congressional support. Similar proposals introduced over the past twenty years have consistently failed to gain traction. The current proposal was part of the Obama administration's fiscal year 2010 budget which made reference to additional tax revenues in excess of $200 billion related to the reform of corporate taxation on foreign earnings.

Robert KempProfessorUniversity of Virginia - CC

Reality Impact - Grasping the Cost of Not Acting to Restore Trust in Capital Markets

September 19, 2008

Analysis of:Fed Tentatively Agrees to Provide $85bn to AIG | www.washingtonpost.com

There are significant arguments today on what should or should not be done to address the current capital market crisis.  In reality, market economies first and foremost rely on trust.  When trust is lacking, the ramifications are significant and far reaching.  The mistrust of one sector multiples into problems throughout other sectors.  A good example is the impact of capital markets on nonfinancial services businesses.  This point is easily seen in the cost of credit, or the lack of credit.  However the impact is much greater than mere credit.  An example is unfudned pension and other post retirement benefit plans (OPEB). The cost of not restoring trust in the capital markets needs to be understood, in all aspects.  The price is high (e.g., government spending and assuming risk) on both sides of the argument.  However all costs, on both sides, must be understood and measured before judgements are made.

Robert KempProfessorUniversity of Virginia - CC

Fair Value Accounting - The Good And Bad Of It In The Real World

September 15, 2008

Analysis of:Fair-Value Revolution: Historical cost accounting is fading as Corporate America marches into a new era. | www.cfo.com

Fair value accounting, or mark-to-market accounting, is not new.  The debate of how to account for value has been around for decades.  However the implications of fair value accounting, versus historical accounting, are far reaching and often not grasped.  A society needs to be careful in setting accounting standards that may or may not reflect its cultural values.

Robert KempProfessorUniversity of Virginia - CC

Valuation - The Trick Is In The Fundamentals

August 25, 2008

Analysis of:Kazakh rival lifts ENRC stake to block bid | www.ft.com

To accept or reject an offer to sell all or part of a company is a challenge.  There are two issues.  First is the maximization of shareholder value.  The second is understanding the basis of conflicting valuations. 

Gil ManzonAssociate ProfessorTRUSTEES OF BOSTON COLLEGE

Is Western Union Market Share Taking Market Share from Competitors?

April 24, 2008

Analysis of:Western Union 1Q profit rises 7 percent on international | biz.yahoo.com

I think the information presented in the article is consistent with Western Union picking up market share from competitors. Despite flat U.S. revenues over 05-07 period and likely near flat revenues from the U.S. in Q108 in part attributable to the Mexican results, Western Union has gained significant international market share over the 05-07 period and, with Q108 gains coming from China and India, this trend appears to be continuing (international revenues up 9% relative to total in 05-07 period and 43% in absolute terms). Absent a significant shift in the size of the market for money transfers, these gains would have come at the expense of competitors.

Thomas KleinManaging MemberKleinCPA PLLC

Security Writedowns Today May Lead to Massive P&L Charges Later for C, MER and Others

April 21, 2008

Analysis of:A Way Charges Stay Off Bottom Line | online.wsj.com

Depending upon management's classification of a security (i.e., either "trading" or "available for sale"), a charge may or may not appear on the income statement in the same period as the write-down on the balance sheet. If the security is classified as a trading security, the charge on the income statement will occur in the same period as the write-down. However, if the security is classified as available for sale, the charge bypasses the income statement and is taken directly to stockholders equity. If the value of the security does not recover prior to its liquidation, the charge typically is taken in the year of liquidation. The potential charge for write-downs related to available for sale securities can be quantified by looking at the statement of stockholders equity, particularly other comprehensive income.

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