GLG News by IFRS Accounting Specialists

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Securities, Rating Agencies, Accounting, True Value and Fair Value - A Paradigm Look

July 14, 2009

Analysis of: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.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Charles Darwin, Adam Smith, Accounting and Financial Rules

July 13, 2009

Analysis of: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.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Fair Value - The Continuing Debate - Why it Never Ends?

July 8, 2009

Analysis of: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.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Fed, The Economy, Accounting and Regulation - Changing Landscape for a New Century

June 24, 2009

Analysis of:US Groups Face Regulatory Revamp | www.ft.com

Banks, Insurance companies, Investment bankers, Hedge funds - they are all up against the wall facing new regulatory pressures. The Alan Greenspan era is over. Alan Greenspan was supposed to have a magic wand with which nothing went wrong. Its like Napoleon asking for a few lucky generals - Greenspan was one such in the financial world of today. Bernanke obviously is not. In this analysis I look at some of the aspects of the changing regulatory landscape.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Accounting and Financial Risk in the Background of Declining Credit Availabilty

June 16, 2009

Analysis of:Liquidity, Crime Woes Shake Up Chief Risk Officers | www.cfo.com

The current situation of non availability of credit is leading to a position where Chief Risk Officers and CFO's will have a difficult time in funds management, meeting profitability targets and running a business. Funds constraints  will make it difficult to extend credit to customers when financial institutions and creditors are making credit vanish. Such a situation may also lead to conditions where accounts may be stage managed simply to keep creditors at bay. In this analysis I look at the peculiar conditions which I expect to come to play in the coming years and suggest that better control systems need to be in place not just in organizations but also in the wide spread global capital village.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Cost of Capital - The Formula Which No Longer Makes Sense In A Changing World

May 27, 2009

Analysis of:A Losing Formula | www.cfo.com

The financial world is changing and undergoing metamorphosis. Companies like GM and Chrysler are insolvent. Stock indices gyrate for no reason. Financial giants regularly go bust these days - so it seems. In this scenario what we have is a situation where the basic formulae for computing the cost of capital and such basics as beta and delta are becoming misleading. It is just not possible to calculate the systematic risk attached to a market or the unsystematic risk of a security. In this analysis I look at where this confusion is heading and how we may soon see a sea change in the way in which financial costs based on accounting statements are calculated.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Economy and Credit Cards - Games Banks Play

May 19, 2009

Analysis of:Credit Card Industry Aims to Profit From Sterling Payers | www.nytimes.com

The referred article speaks of the banks - with their backs against the wall - thinking of evolving new rules for the good customers. The concept seems to be to create new rules so that bank earnings increase at the cost of the customer. To my mind this will only make the sterling customer disappear. Also from an accounting point of view it will create unnecessary complications. In this analysis I look at these two aspects.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Forensic Accounting - Fraud - A Perspective

May 18, 2009

Analysis of:In House Fraud Cases Surge | www.ft.com

The referred article speaks of the increased levels of fraud by insiders in organizations across countries - especially those that are hit by recession. In this analysis I take a look at how this will impact forensic accounting and indepth audits. The role of the accountant and auditor will gain emphasis and management will have to take increased care to safeguard assets - the stewardship function.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

Internal Audit - The Changing Face and Stimulus

May 15, 2009

Analysis of:Internal Auditors: Mission Unaccomplished? | www.cfo.com

The face and scope of internal audit is changing. With time processes have always taken precedence over actual verification - except when a major fraud was discovered. The referred article speaks of the change now that the newness of Sarbannes Oxley is over and business is back to normal - atleast in terms of reduced major frauds. The article is however misleading because it relies to an excessive extent on statistics presented in a verbose form (which misleads) as compared to a tabular format (which is easier to read). In my analysis below I look at how and why internal audit is becoming increasingly relevant and all aspects are equally important.

Nitish GroverPrincipal, OwnerNitish Grover and Associates

The Price of Financial Innovation - Pitfalls in the Road

April 30, 2009

Analysis of:Fed Chief Warns Against Stifling New Ideas | www.ft.com

The price of financial innovation can be like the ends of a pendulum. I would compare it to say research in medicine - except that there are no clinical trials for financial products. Just as thalidomide created major deaths/deformaties  relating to the birth of children in the 1960's so CDO's without adequate testing have created mayhem in the first years of this century. I draw the parallel between thalidomide and CDO's because in both cases there was said to be great innovation without adequate backup research and testing. Bernanke in the referred article speaks of the good of financial innovation. I agree - but then clinical and proper testing of financial products is equally necessary for financial products. This is the emphasis of my analysis below.

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