Jim Ulvog

The picture is starting to emerge on the severity of LIBOR scandal

Leave a Comment / Accounting /

The Economist has a very depressing article that describes the range and depth of the LIBOR disaster: The rotten heart of finance.  If you are following LIBOR scandal, you will really want to read this article. Be forewarned it makes for sad reading.

There are two different ways LIBOR rates have been manipulated.

First is a longer running and less severe manipulation. For number of years, at least since 2008, perhaps as long ago as 2005, and perhaps even earlier, the article says traders inside the banks have been moving the rate a little bit. Second is a larger amount of movement for a shorter period of time. This took place during the financial crisis of 2008 in order to understate borrowing costs.

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The picture is starting to emerge on the severity of LIBOR scandalRead More »

The picture is starting to emerge on the severity of LIBOR scandal Read More »

Who suffers from playing games with LIBOR?

5 Comments / Accounting /

Earlier post discussed the blooming scandal over LIBOR rates.

Short version – Barclays has admitted it underreported borrowing costs which in turn affected the LIBOR rate, which is the base for calculating the interest rate on many loans.

The populist-type comments I’ve seen so far suggest that consumers are being ripped off. 

I don’t think so. Consumers aren’t the ones who suffer.  Here’s why:

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Who suffers from playing games with LIBOR?Read More »

Who suffers from playing games with LIBOR? Read More »

Might be time to start paying attention to the LIBOR scandal

1 Comment / Accounting /

The fiasco over calculating LIBOR is a bit complicated, but it might be time to start paying attention.

The story is manipulation of LIBOR, a key interest-rate benchmark. Barclays Bank is one of the biggest banks in England. During the economic crisis in 2008, Barclays was underreporting their borrowing costs, which in turn artificially pulled down LIBOR.

So what?

This is a big deal because of the way LIBOR is calculated and how it is used.

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Might be time to start paying attention to the LIBOR scandalRead More »

Might be time to start paying attention to the LIBOR scandal Read More »

Try a new thing three times before you decide whether you like it

Leave a Comment / Other stuff /

Try a thing you haven’t done three times.

Once, to get over the fear of doing it.

Twice, to learn how to do it.

And a third time to figure out whether you like it or not. 

Multiple internet sites attribute this to Virgil Thomson, American composer.

I’ve been pondering that quote over the last week or so. Lots of wisdom there. Doesn’t apply to everything, but it has lots of value for many situations, especially when dealing with radical change.

(cross-post from my other blog, Outrun Change.)

Try a new thing three times before you decide whether you like it Read More »

Journey through a peer review – reviewing firm approved

Leave a Comment / Peer Review /

Part 3 of my journey through the peer review process.

Previously I mentioned there’s a 30 day deadline from when my scheduling form was approved until I needed to advise CalCPA which firm I would like to perform my review.

Well, I didn’t hit the 30 day deadline. So two days after the deadline I received a reminder saying I have an extra 15 days.

It’s almost like the administering entities have figured out that CPAs don’t do things until they have a deadline staring them in the face. Imagine that!

I’ve now made arrangements with the firm that will do my review. I filled out Exhibit 1, which only took a few minutes.

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Journey through a peer review – reviewing firm approvedRead More »

Journey through a peer review – reviewing firm approved Read More »

How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.

2 Comments / Accounting, Fraud /

Here are some more journal entries that describe how Olympus moved money in their accounting fiasco.

‘Michael’ asked a great question at re: The Auditors about my guest post on the Olympus accounting fraud. 

The full article with my reply can be found at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud.

Here is his question, with slight editing:

If they actually bought the tiny companies for way more than they were worth, this would not fix their problem, they would just have the original losses plus the new losses on the companies that they overpaid for.

The only way this works is if they claimed to pay $1,000,000 for the companies but in reality only paid $100,000. Is this the case?

For example if they paid $1,000,000 for the subsidiary you would.

  • Dr. investment 100,000
  • Dr. goodwill 900,000
  •      cr. cash $1,000,000

There would be no cash in the subsidiary, just goodwill. So how could the subsidiary purchase the financial assets that were seriously underwater? The subsidiary would have to actually pay the inflated fair value for this to work?

A very good question, Michael. 

I’ll go into more detail on how the money was moved and my read on what summarized entries would be.  I posted my reply at re: The Auditors. Francine McKenna has allowed me to reprint my response. Here is my explanation:

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How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco.Read More »

How do you overpay for an acquisition but keep the announced sales price? More journal entries to describe the Olympus fiasco. Read More »

Another reason IFRS are a really bad idea

2 Comments / Accounting /

All economies, cultures, and societies operate the same way, right?

I just realized that’s a fundamental underlying concept of IFRS. One set of accounting rules can be applied consistently in all nations regardless of the divergence of legal systems, regulatory structures, ethical frameworks, and general worldviews.

I realized that is yet one more severe conceptual failure in IFRS after reading Global Accounting Rules – An Unfeasible Aim by professors Stella Fearnley and Shyam Sunder. David Albrecht has reprinted their op-ed in his blog post, UK Prof and USA Prof Against Global Accounting Rules.

Here is the key aha! sentence for me: …

Another reason IFRS are a really bad ideaRead More »

Another reason IFRS are a really bad idea Read More »

Outline of “small gaap” visible in the distance and it is not a mirage

Leave a Comment / Accounting /

The general shape of the Financial Reporting Framework for Small-and Medium-sized Entities appears in a FAQ from the AICPA: AICPA’s Other Comprehensive Basis of Accounting (“OCBOA”) Project – 2012.

The Financial Reporting Framework will be referred to as FRF. The AICPA describes it as

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Outline of “small gaap” visible in the distance and it is not a mirageRead More »

Outline of “small gaap” visible in the distance and it is not a mirage Read More »

Should churches disclose open tax years? Probably not.

Leave a Comment / Accounting, Audits /

I previously discussed that NPOs should disclose open tax years – TIS 5250.15.

TIS 5250.15 says that NPOs without any uncertain tax positions still have to disclose open tax years.

ASC 740-10-55-217 suggests this wording:

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-US income tax examinations by tax authorities for years prior to 20×1.

Does that apply to churches?

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Should churches disclose open tax years? Probably not.Read More »

Should churches disclose open tax years? Probably not. Read More »

Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.

Leave a Comment / Audits, Fraud /

The Wall Street Journal reports Olympus and Ex-CEO Woodford Settle Lawsuit with expected payment to Michael Woodford for approximately $15 million.

The article, behind a pay wall, indicates the settlement is moving towards approval by the Olympus board.

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Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus.Read More »

Olympus will settle claim from fired chief executive. Also expected layoffs at Olympus. Read More »

Need to develop an audit methodology? Check out the perfomance audit chapters in the Yellow Book

Leave a Comment / Audits, Other stuff /

Do you need to develop an audit methodology and don’t want to rely on the entire body of knowledge that exists in the SASs?

How could you wind up in that situation?

You might need to develop an audit model for your church denomination, or field programs of an international relief and development organization, or local affiliates of a national organization. Obviously you could just tell your local programs to find a CPA and have them comply with GAAS.

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Need to develop an audit methodology? Check out the perfomance audit chapters in the Yellow BookRead More »

Need to develop an audit methodology? Check out the perfomance audit chapters in the Yellow Book Read More »

Be creative *inside* the box

3 Comments / Pondering /

Blogger ejwcpa at NFP Audit and Accounting challenges us accountants to help our organizations, clients, and staff in the field by being creative and developing helpful ideas while working inside the box. The post is be creative.

It’s not so tough to get wildly creative if there are no boundaries.

It’s much harder when there are federal tax laws, state tax laws, local zoning issues, unending streams of employment laws, accounting rules, reporting requirements, internal control issues, sales tax, regulators from dozens upon dozens of agencies watching us, and privacy rules that create steel-reinforced concrete walls to the box we work in.

Check out this comment:

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Be creative *inside* the boxRead More »

Be creative *inside* the box Read More »

Two new financial reporting frameworks. FAF makes a decision on private company accounting rules. AICPA starts work on new accounting rules for private companies.

Leave a Comment / Accounting /

FAF has approved a new organization that will determine what rules in GAAP don’t need to be applied to private companies.

The lead paragraph from Accounting Today:

The Financial Accounting Foundation’s board of trustees has voted to establish a new Private Company Council that will determine whether exceptions or modifications to U.S. GAAP for privately held companies are necessary.

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Two new financial reporting frameworks. FAF makes a decision on private company accounting rules. AICPA starts work on new accounting rules for private companies.Read More »

Two new financial reporting frameworks. FAF makes a decision on private company accounting rules. AICPA starts work on new accounting rules for private companies. Read More »