What’s the Diagnosis – Accounting Fatigue Syndrome (AFS)?

At a recent conference in Orlando, financial executives discussed one of the top reasons for employee fatigue – a continuous stream of regulatory and accounting standard-setting guidance that has been issued in recent years and the promise of more to come over the foreseeable future.

Questions:

1. Although the article provides little detail, what accounting standard-setters and regulators do you think CFO’s are referring to?
2. What areas will be affected by the six major projects currently under way, which are expected to be revealed next June?
3. Explain why Jay Hanson of McGladrey & Pullen says that “more principles-based rules will require seasoned professionals, not recent graduates.”
4. What particular area of accounting is one that will demand “an army of people”?

Source: Johnson, Sarah. (2010). “A Growing Contagion: Accounting Fatigue Syndrome,” CFO.com, March 9. (Retrievable online at http://www.cfo.com/blogs/index.cfm/l_detail/14482207?f=blog_mostrecentpost)

“Deadbeat” and proud of it?

When you hear the word “deadbeat,” you automatically think bad things.  According to former MBNA employee, Jerry Young, a credit card deadbeat is the insider term used by credit card company executives, that refers to credit card users who pay off their bills promptly and in full each month. Doesn’t sound too bad, right? By doing so, such customers pay no interest and prevent the bank or creditor from making any profit. Alternatively, what endears you to the credit card folks is to be a “revolver.” A revolver is a credit card user that constantly carries a balance and is charged regular, monthly interest on their charges. Sounds a little bit like Alice in Wonderland?

Questions:

1.  Look at the article, ” I’m a Credit Card Deadbeat: You Can Be One Too!” by Stephanie Andrews (http://ezinearticles.com/?Im-a-Credit-Card-Deadbeat:-You-Can-Be-One-Too!&id=81004). What was the most interesting way that she was able to get credit card companies to pay her for using their cards?

2. According to Ms. Andrews, ” To be a credit card deadbeat you need persistence, determination, and discipline.”  If you were doing a cost/benefit analysis of following her advice, what do you think were the costs that the article did not discuss?

3.   According to Jerry Young, how long did it take on average for a credit card company to develop a revolver?  Do you think this has changed under the current economic conditions?  Explain.

4.  Research Jerry’s old company, MBNA.  What happened to the firm? 

Source:

Andrews, Stephanie. ” I’m a Credit Card Deadbeat: You Can Be One Too!” EzineArticles.com, Finance/Credit Section (Retrievable online at http://ezinearticles.com/?Im-a-Credit-Card-Deadbeat:-You-Can-Be-One-Too!&id=81004)

Americans for Fairness in Lending. “Deadbeat Customers” video (Retrievable online at http://www.youtube.com/watch?v=CmG4QFQaP9M).

The Effects of Converting to IFRS

The Effects of Converting to IFRS

The primary question raised in this article is:  “What effects would switching to IFRS have for companies, if forced to switch by the SEC?” Based on a panel of four executives from four major companies, most agreed that there will be almost no material effects in areas that investors care about. 

Questions:

1.  Based on the opinion of Jack Klinger, director of accounting research at Alcoa, what would be the greatest impact of IFRS for his company?

2.  What did Aaron Anderson, director of IFRS policy at IBM see as the benefit of converting to IFRS?

3.  Based on comments by HSBC’s chief accountant, John McGinnis, what was a benefit to the bank of reporting U.S. results in IFRS?

 Source:

Leone, M. (2010). Unfazed by IFRS. CFO.com, Today in Finance, April 30. (Retrievable online at http://www.cfo.com/article.cfm/14495043/c_14494842?f=TodayInFinance_Inside)

A Cost Allocation Dilemma

A Cost Allocation Dilemma

The CIO Executive Board is a membership of senior executives with a shared commitment to steward enterprise-wide IT initiatives. In their role of offering cross-functional perspectives on IT and practical tools to promote strategic agendas, the Board found via a survey that most companies are using a “lump sum” cost allocation method to distribute IT operating costs and that this method typically provides little connection between the costs and the volume of services actually consumed.

Questions:

1. Based on the article, some companies used a “granular-chargeback model.”  Explain what this is and its benefits or costs.

2.  What is the CIO Executive Board recommending at the best practice for allocating IT costs?

3.  Explain in your own words what you see as the benefits of implementing the CIO Executive Board’s recommendations.

Source:

McCann, David. (2010) The New Star of IT Cost Allocation. CFO.com, Today in Finance, April 28. (Retrievable online at http://www.cfo.com/article.cfm/14494101/c_14494842?f=TodayInFinance_Inside)

What If You Can’t Pay Payroll Taxes?

In this video, Darrin T. Mish, tax attorney discusses some of the questions businesses ask about non-payment of payroll taxes.  His advice is to “get current” as soon as possible, even though the IRS may not catch the lapse for up to four years and because IRS payroll tax problems can quickly escalate, once identified.

Questions:

1. What form is the Employer’s Quarterly Federal Tax Form?

2. What is known as the trust fund portion of the payroll tax obligation?

3. In general, if an agreement is made with the IRS to pay back payroll taxes, over how many years is this agreement?

Source: YouTube.com. What to do if you are behind on payroll taxes, June 23, 2009. (Retrievable online at http://www.youtube.com/watch?v=HTvpHyl4WsA)

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