August 21, 2018

Accounting News Roundup: Buffett’s Nightmare, Musk’s Drama, AmTrust’s Probe | 05.07.18

Buffett Accounting ‘Nightmare’ Fuels First Loss in Nine Years [Bloomberg]
Although new rules that require unrealized gains and losses from equity investments “will produce some truly wild and capricious swings in our GAAP bottom line,” Uncle Warren recommends looking at Berkshire Hathaway’s operating income as “a better barometer” of the company’s performance. It increased 49 percent to $5.29 billion in the first quarter.

Tesla’s Numbers Are Even More Dramatic Than Its CEO [WSJ]
The bond price, net working capital, and free cash flow, among other metrics, are not looking so hot.

See also: Elon Musk trolls Warren Buffett

AmTrust Has Been Under an SEC Investigation for Five Years [WSJ]
We’ve noted stories about AmTrust that have included auditor spying and a beautiful woman laughing at bad accounting jokes, and all this has been going on while the company has been under an SEC investigation for 5 years. The company finally disclosed this fact last week, with a bleak outlook: “AmTrust said it can’t predict when or how the inquiry will end or whether it could have a material impact on the company.”

Previously, on Going Concern…

On Friday, I wrote about EY’s settlement with a now-former partner over its failing to act on her sexual misconduct complaint against an also-now-former partner.

In Open Items, someone is asking about federal jobs.

From the archives: Deloitte Manages to Tone Down Its Response to This Year’s PCAOB Inspection Report

In other news:

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  1. I agree with Buffett’s view. This new accounting rule, requiring Available-for-Sale securities’ unrealized gains and losses to be included in net income, will lead to wild swings in net income. As the market (Stock market and Bond market) goes through up and down cycles, so too does the fair value of these Available-for-Sale securities (stock and debt securities). Therefore, there will be wide range amounts for unrealized gains and losses. As a result, net income will be greatly affected, leading to wild swings. Also, profitability ratios will be greatly affected. The smart investment analysts will take out these Available-for-Sale securities’ unrealized gains and losses to normalize net income for investment analysis. FASB needs to make up its mind. If I remember correctly from college, the reason FASB decided to require that Available-for-Sale securities’ unrealized gains and losses be EXCLUDED from net income (I believe it was the early 1990s when the rule was made) was because it would lead to large net income volatility and affect performance measures. Now, FASB is saying that INCLUDING these unrealized gains and losses in net income would be a better measure of a company’s performance. Jeesh, make up your mind. The same thing is going to happen just like when FASB changed the rule about financial liabilities’ recognition. In about 2007, FASB introduced the Fair Value Option rule for financial liabilities’ recognition. As a result, companies that chose the fair value option started to record wild swings for unrealized gains and losses. This in turn caused net income to be volatile for these companies. Sorry for the long post. I’m a technical accounting geek!

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Accounting News Roundup | 01.21.10

How to find the “best and brightest” [CPA Success]
This may be a better topic for the friendly HR professional but figuring out who these future accounting rock stars are before they show up on their first day is “more art than science”, as Tom Hood notes.
Popular to some old-school thought, GPA does not always indicate who’s going to dominate in the real world and “soft skills” — besides being a terrible term — are in more demand than ever.
Help The The American Red Cross of Greater Chicago Help Haiti [Re: The Auditors]
The American Red Cross of Greater Chicago is having a drive today and since Francine’s friend is the CFO, we’ll be glad pass around the news:

One of my oldest and dearest friends, Guillermo Becerra, is the CFO of the American Red Cross of Greater Chicago. I asked him how I could help him, and the Red Cross, during what must be an incredibly busy time post-Haiti earthquake.


“The Chicagoland community will come together on Thursday, January 21 to give to the American Red Cross as we help the people of Haiti recover from the catastrophic earthquake that devastated their country last week.
The Chicago Helps Haiti media relief drive begins at 5 a.m. and lasts until 11 p.m. Nearly every TV and radio station in our area will be promoting this fundraising effort throughout the day. You can help too, by giving via phone or online, and sharing your thoughts here, on Facebook or Twitter, and by asking others to give.
To give from 5 a.m. to 11 p.m. CALL 1 (877) 565-5000 or visit www.chicagoredcross.org/haiti

Plus, we’re guessing that if you give, your 2009 tax return isn’t much of a concern.
If Your Password Is 123456, Just Make It HackMe [NYT]
The Times is concerned that you have a shitty password which puts you at a huge risk of being hacked by someone sitting in their parents’ basement.

Imperva found that nearly 1 percent of the 32 million people it studied had used “123456” as a password. The second-most-popular password was “12345.” Others in the top 20 included “qwerty,” “abc123” and “princess.”

You know who you are, ye with stupid passwords. Also, don’t even think of changing it to “654321” because that drops in at #19.

Accounting News Roundup: Haiti Relief Passes Senate; Accounting Job Surge? CPAs Basically Control People’s Lives | 01.22.10

Senate votes for faster tax breaks for Haiti gifts [WaPo]
As expected, the U.S. Senate unanimously passed legislation yesterday that allows taxpayers to deduct donations made for Haiti relief efforts. You have until the end of February to donate so that it may be included on your 2009 return.

Maybe it’s bad legislation but we’ve been over that.

CPA Jobs Set for Surge. But When? [CPA Trendlines]
That’s the question, isn’t it? Rick Telberg, who has done a great job of tracking the Bureau of Labor Statistics on accountants, points out that while the latest BLS forecasts a 22% increase (279,400 jobs) by 2018, there’s no indication that it’s happening now:

[M]any tax, accounting and finance professionals are still slogging through the Great Recession. The Association for Financial Professionals, for instance, reported that about one in four respondents say their organizations will contract in 2010. At the same time, a PricewaterhouseCoopers survey of private companies found 43 percent of CEOs and CFOs still budgeting no expansion over the next 12 months to 18 months. The data just seem to reinforce economic uncertainties and a weak outlook.


The BLS is looking past the past the recession for the jump in opportunities but just when the hell will that be? Just because the economy isn’t contracting currently, doesn’t mean it won’t in the future and this “recovery” has been tepid at best.

Theismann to CPAs: You Are the Conscience of America [Web CPA]
Joe Theismann gets it. He knows that without all of you out there in CPA land, your clients don’t stand a chance. They’d be finished. Finished!

“You’re the conscience of America,” Theismann told conference-goers. “You are the survivors in tough times. With accountants, I’m not looking for someone to file taxes and do my financials. I can do that myself online. In your position you can basically control people’s lives.”

So get out there and control somebody’s life. Joe Theismann is expecting it.