• Financial reporting based on bygone era, Microsoft says [Accountancy Age]
Softie’s Technical Accounting Director Bob Laux says that the financial reporting model is waaaaayyyyy behind the rest of the world in providing relevant information. In a letter to the IASB, Mr. Laux describes the broken model:
“In essence, we have a financial reporting model largely based on a manufacturing economy and the industrial age, while the economy has moved to the information age and the financial reporting model has failed to change accordingly,” he said.
He also said that arcane accounting rules, creative accounting to meet analyst expectations, etc. are all ‘symptoms of a bigger problem – a broken financial reporting model.’
This is probably the most poignant example of the “historical financial reports are of limited use” argument that we’ve ever heard. No one uses historical financial statements to make decisions about investing anymore. Sure there are fundamentals that you can derive from them but ultimately you have outdated information that’s part of a large compliance exercise and in this day and age, few people (including Microsoft, apparently) have little use for that.
• Tax Rates for Top 400 Earners Fall as Income Soars, IRS Data [Tax.com via Bloomberg]
If you’re wealthy (Chris Rock definition) then you’ll be happy to know that your taxes during 2007 were the lowest they had been in 20 years, according to statistics provided by the IRS.
The top 400 earners paid an average effective tax rate of 16.6% during the ’07 while in 1993, the average effective rate was 29.4%. KA-ching. Now before you rich haters get all worked up, there is another way to see this data:
Bill Ahern, director of policy and communications for the Tax Foundation, a Washington research group that advocates lower taxes, said the 2007 data doesn’t reflect the current economic circumstances.
“In a good year like 2007, it’s not surprising to see that the owners and managers of the nation’s largest firms made a fortune,” Ahern said. “Notice that two-thirds of their 2007 income was in capital gains, which have dropped like a rock since then.”
Regardless of how you feel about the widened gap, it’s not a stretch to say these facts will be exploited as populist pandering during the upcoming election cycle, as Democrats see their popularity slipping.
• U.N. Climate Chief to Resign [WSJ]
Yvo de Boer will be resigning his position with the United Nations to join KPMG as an adviser on climate and sustainability as well as working with several universities on the issue.
“It was a difficult decision to make, but I believe the time is ripe for me to take on a new challenge, working on climate and sustainability with the private sector and academia,” said Mr. de Boer, who has led the U.N. Framework Convention on Climate Change as its executive secretary since September 2006…
“I have always maintained that while governments provide the necessary policy framework, the real solutions must come from business,” he said in a statement.
Plus the money is probably good. Pretty impressive for KPMG to bag such a high profile dude on a still-emerging issue. Seems that KPMG et al. are making a seriou push into climate change as the IFRS and XBRL opportunities are slow to develop.