GLG News by IFRS Accounting Specialists

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Asset Diversification, Accounting And The Myths of Globalization - Where Are We Headed?

November 5, 2008

Analysis of:The Myth of diversification: All Bets Are Off | www.economist.com

As the global financial meltdown continues, we hear more and more about  the role of Central Banks, Pension Funds, Accountants and a host of other players. We are also hearing a lot of talk of  accounting rules being responsible for the global financial crisis. In this analysis I  argue that all these are only contributory factors - what really matters is the role of human greed in imperfect markets. All myths are today being demolished and honored financial fortunes and names are being wiped out. In this analysis I  argue on why these myths are disappearing and where we may be headed in the arena of  financial markets.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

When The Sky Falls - How Accounting Analysis Can Help Correct The Financial Imbalance

October 14, 2008

Analysis of:A Power That May Not Stay So Super | www.nytimes.com

Over the last few weeks the sky has fallen and the latest cover of the Economist has the heading "Saving the system - The Panic, The Rescues and a Special Report on the World Economy".  Different newspapers are covered with details of virtual nationalizations, lost bank confidence and the list goes on. In this analysis I look at how accounting analysis can actually help correct financial imbalances when the sky has literally caved in or fallen.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Credit Meltdown - Effects of Global Co-ordinated Action - Why the Present Actions are misplaced - Nature of Steps Needed for Correction

October 13, 2008

Analysis of:Bush says 'Co-ordinated' response necessary | www.ft.com

The clarion call today is for coordinated global action to surmount the global credit and liquidity problem. It does not appear to be leading anywhere. While the initial epicenter was located in the United States it has now spread to other areas of the globe and in my opinion the epicenter now extends to Europe and Asia as well. In this analysis I take a look at the steps being taken and why these are inadequate and the policy makers are running after red herrings.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Credit and Banking Meltdown - The Disruptive Effect of Politics on Financial Statement Presentation - The Nemesis of Finance

October 7, 2008

Analysis of:Politicians rail against fair value accounting | www.ft.com

As I  write this article the Senate has passed the $700bn bailout package. There is also general  unanimity to increase the limit upto which bank deposits are insured upto $250000. Yet all this only reflects the effect of  politics on the economy. There is also pressure to allow banks to measure financial assets by suspending the use of fair value and the SEC has indeed recently issued guidance in this regard. All this will not restore the credit markets and in this analysis I argue why in my opinion the present situation is just a beginning and a lot more needs to be done to restore confidence in credit and financial markets - most of  this needs to be done by the market participants themselves. 

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Banking Crisis - A renewed role for the IMF - Will we have a renewed Bretton Woods System?

October 7, 2008

Analysis of:Another Top European Bank Falters | news.bbc.co.uk

The  present  banking crisis provides an opportunity for  the  Bretton Woods twins and  especially  the  IMF  to  prove their relevance in the 21st century. The past few years had seen the eclipse of  these  two institutions with reduced relevance. The new situation which resembles to a great extent that which  existed in the early parts of the last century with problems of flight of capital, wars, non-existent security etc. which  had  given rise to the  concept of  SDR's - these are rarely discussed these days. The problems of  balance of payments and trade are also not discussed in the same vein as they were say in the days of Alfred Marshall. In this analysis I take a look at why the banking crisis requires the IMF to work in tandem with governments and  Central Banks.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Fair Value - The Bankers Blame It for Their Woes - The Familiar Blame Game

September 29, 2008

Analysis of:ABA Levels New Blast at Fair Value | www.cfo.com

When the going gets tough deflect the blame. That's an age old tactic. The banks and the global financial system are in a mess. The mess has been created by "easy credit" and  now the bankers want to blame accounting rules and the concept of  fair value. This is like going back a 100 years in accounting. It is the  stratagem used by defenceless managements when their bluff has been called and exposed. In this analysis I examine why fair value should be used for measuring the value of assets especially in the case of financial instruments. I also  argue that it is not right for the banks to ask the regulators to tell them how to arrive at fair value. This is their job. Simply because their access to capital and their profitability is affected is no reason for using intrinsic value which is easy to manoeuvre.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Accounting and Fair Value Considerations - Monetary Policy - Market Corrections - Financial Statements

September 22, 2008

Analysis of:Punctured Bubblenomics- Understanding the Shrinking Economy | www.nytimes.com

As I  look at the troubles facing the financial world and global economy as a bystander and a involved person (as  a  finance professional) I actually see  a  certain amount of  humor in the entire situation. Monetary policy during  the  last  few  years did not follow the basics which I learnt at college, accounting got embroiled in politics. The number of  esoteric instruments being invented were just too many. In several cases these instruments were designed to get around rules which would have brought out their fair value. Those who blame fair value should instead blame the managements of institutions which were always trying to outmaneuver the market instead of improving productivity and generating real wealth. In this analysis I look at these various conundrums from an accounting and earnings perspective.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Risk management in Troubled Times - Comparative anaysis at Merriyl and Lehman

September 22, 2008

Analysis of:Death and Near-Death Experiences on Wall St. | www.nytimes.com

The referred article is a great comparative  between the strategies followed by Merriyl and Lehman respectively. While Merriyl Lynch was constantly considering strategies to overcome the liquidity crisis, Lehman was basking in its past. Merriyl was considering the basic tenets of risk management, Lehman considered it had no risk. Merriyl carried out a regular effective SWOT analysis while Lehman did not consider it necessary. In this analysis I look at  the  basic tenets of  risk management. I  also argue that while we are going to see an improvement in the financial market confidence, yet the Federal Government policies are misguided and the number of threats for financial institutions far outweigh the positives.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Finance Manager - What Happens When the Going Gets Tough - Changing and Emerging Role

September 18, 2008

Analysis of:New AIG Chief Liddy has Finance in His Blood | www.cfo.com

The present banking crisis is once again bringing out the importance which prudent financial management plays in wealth creation and maintenance. Till  now it was profits, sales targets and gross billing which  was important. The growth and continuing existence of the organization was taken as given. This was both at the macro and micro level. A finance manager who urged caution or an auditor who had reservations on a financial statement was considered to be a unnecessary stumbling block. Now that honored names on the corporate scoreboard are collapsing the existence of  organizations is becoming more important. Concepts like internal controls, proper valuation of assets/liabilities and returns on investment are more important. In this analysis I take a look at this new emerging trend where finance is gaining importance in a tough environment.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

AIG - Northern Rock -Freddie - Fannie - Bear Stearns - A Look at Changing Times

September 17, 2008

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

The  Fed gets  more confused every  day.One day it  says  no  bailouts the next day it reverses course. The  latest being in the case of AIG which has virtually been nationalized. The  trend  of  Northern Rock (UK) and  then Bear Stearns, Freddie, Fannie and now AIG is completely straight forward. The only exception was in the case of Lehman which did not receive support. I wonder why? Yet the  present scenario is  one where the  Fed has said no more inflation control - liquidity and stability is more important. These are changing and financially confusing times. In this analysis I  look at  where this confusion is headed.

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