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

Robert KempProfessorUniversity of Virginia - CC

GM, Pension Funds, and Risk Management

March 15, 2007

Analysis of:GM to shift 20% of pension from stock to bonds | money.cnn.com

Pension fund management has historically focused on maximizing return.  However today, risk management is taking center stage.  General Motor's announcement focuses on this point. 

Robert KempProfessorUniversity of Virginia - CC

Pension funds, property derivatives, and risk

March 15, 2007

Analysis of:Property derivatives poised for US launch | www.ft.com

Pension funds are embracing a new opportunity in property derivatives. 

First, managers of pension funds must be careful to understand the derivative, its underlying asset, and the impact on the return/risk of the pension fund's portfolio. 

Second, managers of pension funds can not focus on enhancing returns through speculation.  They must use such instruments to manage risk (hedge).

  

Robert KempProfessorUniversity of Virginia - CC

A Closer Look At Convergence of Accounting Standards: The Reality of Our World

March 8, 2007

Analysis of:Found in Translation: A guide to using foreign financial statements | www.aicpa.org

1.    The need for convergence of accounting standards is real.
2.    The ability to converge accounting standards is challenging due to cultural and legal issues.
3.    Although convergence will ultimately occur, it will occur with a broad based framework that may be adjusted by countries.  The adjustment will be a function of cultural and legal issues.

Robert KempProfessorUniversity of Virginia - CC

China's Pension Challenge: A Sleeping Dragon

March 2, 2007

Analysis of:Heavenly Mandate: Winning a piece of China's pensions market | customers.reuters.com

China's pension issues are real.

The question is, "How will China's government address the pension issues?"

Watch out.  Changes must be forthcoming.

Robert KempProfessorUniversity of Virginia - CC

Pension Funds - No Place for Excessive Risks

March 2, 2007

Analysis of:Fewer Second Chances For Failed Fundies | www.dailyii.com

The reality of pension fund management is simple:  fund managers have a fiduciary responsibility.  What that means is risk management is at the heart of managing pension funds.  Today, more than ever, risk management must go beyond the quest for higher returns. 

Gil ManzonAssociate ProfessorTRUSTEES OF BOSTON COLLEGE

FIN 48: What it does and what it will do

February 12, 2007

Analysis of:FIN 48: Accounting for Uncertain Tax Benefits | www.fasb.org

FIN 48 potentially throws firms' tax positions into sharp relief.  Relatively modest preemptive actions and changes in internal control can significantly blunt the extent to which firms are subject to undesired disclosure with respect to their tax positions.

Thomas KleinManaging MemberKleinCPA PLLC

Despite Protests, FASB Will Not Defer Effective Date of New Tax Accounting

January 17, 2007

Analysis of:FASB to Implement Tax Changes Without Delay | www.msnbc.msn.com

The FASB received over 400 letters representing more than 1,000 companies’ concerns about implementation issues related to FASB Interpretation #48 (FIN 48).  The vast majority of the letters requested a deferral of the effective date of the new Interpretation; fiscal years beginning after December 15, 2006 (i.e., the quarter ending December 31, 2007 for calendar year companies).  The FASB voted overwhelmingly not to defer the effective date.  This means that most companies' financial statement will be affected beginning Q1 of 2007.

Thomas KleinManaging MemberKleinCPA PLLC

FASB to Consider Deferral of New Tax Accounting for Uncertain Tax Positions

January 16, 2007

Analysis of:FASB Weighs One-year Delay for FIN 48 | www.cfo.com

FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, is scheduled to become effective for a company's first quarter beginning after December 15, 2006 (i.e., the quarter ended 3/31/07 for calendar year companies).  The FASB announced today that it will consider deferring the effective date by one year when it meets on January 17, 2007.  The possible delay was likely prompted by numerous concerns that have been expressed to the FASB by hundreds of companies.  Implementation of FIN 48 will impact most companies' balance sheets, earnings and cash flows.

Thomas KleinManaging MemberKleinCPA PLLC

2007 Q-1 Marks First Quarter Accounting for Uncertain Tax Positions Becomes Effective

January 9, 2007

Analysis of:Uncertainty Reigns Over Taxes | www.cfo.com

FASB Interpretation No. 48 ("FIN 48"), Accounting for Uncertainty in Income Taxes, becomes effective in a company's first quarter beginning after December 15, 2006 (i.e., the quarter ended 3/31/07 for calendar year companies).  Adoption of the new interpretation will have an immediate impact on most companies balance sheets; in some cases, a material impact.  Thereafter, earnings will likely be impacted as well.  The long-term impact on earnings is still unknown.  Companies that are less aggressive from a tax perspective will see less of an impact on earnings; those that have been more aggressive will likely see a greater impact on earnings (i.e., a reduction in earnings).  In addition to the balance sheet and statement of earnings impact, companies will also have to provide far more information regarding its tax strategies in its income tax footnote.

Robert KempProfessorUniversity of Virginia - CC

Understanding the Risk in Pensions - Financial Analysis

December 13, 2006

Analysis of:Pension demand leads to long bond stripping | today.reuters.com

1.  The market is grasping a fundamental risk in defined benefit plans.  That risk is in matching the duration of the pension fund's assets and liabilities (i.e.,  immunizing the pension fund).

2.  Accountants need to recognize this asset-liability risk and disclose it.

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