Joel Jameson, the founder of Silicon Economics, Inc. is suing the FASB.Â He filed for a patent for his invention called â€œEarningsPower Accounting,â€ and claims that the FASB has infringed upon the patent.Â Jameson claims that his invention is a patented method developed by the company to improve the accuracy, validity, and usefulness of financial statements. SEIâ€™s attorney claims that “FASB’s unlawful attempt to appropriate SEI’s intellectual property undermines innovation and competition, and harms the US economy.
1. Look at the actual filing.Â According to the suit, what are the problems with FASBâ€™s standard setting process and how did these cause harm?
2.Â Based on the sources below, what will Mr. Jamesonâ€™s invention address as a significant factor in the recent economic crisis?
3.Â What is your opinion about Mr. Jamesonâ€™s chances to prevail in this action? Support your reasoning.
On May 13, 2010, retailers won a victory over the fees they pay to banks for credit cards. An amendment by Sen. Richard J. Durbin is just one more element of the financial regulation overhaul currently underway the Senate. Â The measure allows stores to give customers discounts for paying withÂ cash or using cards with cheaper fees, and it would permit retailers to set price thresholds for accepting credit cards. It also tasks the Federal Reserve with crafting regulations for determining whether swipe fees for debit cards are “reasonable and proportional.”
1. What is the average amount that retailers pay to credit card companies?
2. Explain how a retailer makes a journal entry for a credit card sale that includes these swipe fees.
3. Explain how you believe retailers will make journal entries for sales with cash discounts, under the new regulations.
On Thursday, May 13, 2010, the U.S. SenateÂ took steps to overhaul the credit-rating agency business, which is widely maligned for its role in the 2007-2009 financial crisis.Â An amendment by Democratic Senator Al Franken passed for a government clearinghouse to be set up to assign debt rating duties to agencies, with federal regulators developing their own standards of credit-worthiness rather than relying solely on credit rating agency assessments. In a subsequent vote, lawmakers approved a separate amendment by Sen. George S. LeMieux (R-Fla.) that would remove the government’s stamp of approval for a select group of ratings agencies as the standard for credit worthiness.
1.Â Who are the main credit agencies that controversial bill was aimed at?
2.Â This bill is being touted as the biggest overhaul of financial regulation since the Great Depression.Â What regulation(s) was enacted during the Great Depression that impacts accountants to this day?
3. Â Briefly explain bond ratings and why it is important for an accountant to understand this concept.
Simultaneous audits mean two separate exams, conducted by different governments, in which those governments share with each other some of the taxpayer’s information.Â Even though you may not have heard of them, they have existed since the 1970s, but are becoming more common today as government tax agencies race to match the level of global coordination practiced by multinational companies and their tax advisers.
1. What does the article point to as â€œthe biggest downside to an unplanned simultaneous audit?â€
2. What is the most common reason(s) for countries to exchange corporate tax information?
3. Explain the statement â€œfirms would do well to understand the difference between the collaborative modes â€” enforcement and service â€” in which tax authorities operate.â€ Briefly explain the difference between the two and why it benefits firms.
Many have debated the cost of Sarbanes-Oxley (SOX) versus its benefits, given the recent accounting scandals that continue to “pile on”. However, according to Harvard Business School professor, Francois Brochet, the little discussed 2002 provision known as Section 403 is actually making a difference for investors and small companies (and with little cost, unlike some costly Section 404 provisions regarding internal controls).Â Â Â
1. What is Section 403 of SOX?
2.Â In Brochet’s review of more than 50,000 filings of insider trades, what was the benefit of Section 403? Why is this important?
3. What is a Form 4 filing?
4. What measures did the article say that some companies are taking to prohibit executives from making trades based on material nonpublic information?
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.
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”?
When you hear the word “deadbeat,” you automatically think bad things. Â According to former MBNA employee, Jerry Young,Â 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?
2. According to Ms. Andrews, ” To be a credit card deadbeat you need persistence, determination, and discipline.”Â 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. Â According to Jerry Young, how long did it take on average for a credit card company to develop a revolver?Â Do you think this has changed underÂ the current economic conditions?Â Explain.
4.Â Research Jerry’s old company, MBNA.Â What happened to the firm?Â
The primary question raised in this article is:Â â€œWhat effects would switching to IFRS have for companies, if forced to switch by the SEC?â€ 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.Â
1.Â 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.Â What did Aaron Anderson, director of IFRS policy at IBM see as the benefit of converting to IFRS?
3.Â Based on comments by HSBCâ€™s chief accountant, John McGinnis, what was a benefit to the bank of reporting U.S. results in IFRS?
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 â€œlump sumâ€ 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.
1. Based on the article, some companies used a â€œgranular-chargeback model.â€Â Explain what this is and its benefits or costs.
2.Â What is the CIO Executive Board recommending at the best practice for allocating IT costs?
3.Â Explain in your own words what you see as the benefits of implementing the CIO Executive Boardâ€™s recommendations.
In this video, Darrin T. Mish, tax attorney discusses some of the questions businesses ask about non-payment of payroll taxes.Â His advice is to â€œget currentâ€ 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.
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)