Bob Jensen's New Bookmarks April 1-30, 2013
Bob Jensen at Trinity University 

For earlier editions of Fraud Updates go to http://www.trinity.edu/rjensen/FraudUpdates.htm
For earlier editions of Tidbits go to http://www.trinity.edu/rjensen/TidbitsDirectory.htm
For earlier editions of New Bookmarks go to http://www.trinity.edu/rjensen/bookurl.htm 

Click here to search Bob Jensen's web site if you have key words to enter --- Search Box in Upper Right Corner.
For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/

Bob Jensen's Blogs --- http://www.trinity.edu/rjensen/JensenBlogs.htm
Current and past editions of my newsletter called New Bookmarks --- http://www.trinity.edu/rjensen/bookurl.htm
Current and past editions of my newsletter called Tidbits --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm
Current and past editions of my newsletter called Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm

Bob Jensen's Pictures and Stories
http://www.trinity.edu/rjensen/Pictures.htm

All my online pictures --- http://www.cs.trinity.edu/~rjensen/PictureHistory/

FASB Accounting Standards Updates ---
http://www.fasb.org/cs/ContentServer?site=FASB&c=Page&pagename=FASB/Page/SectionPage&cid=1176156316498

Hasselback Accounting Faculty Directory --- http://www.hasselback.org/

Blast from the Past With Hal and Rosie Wyman ---
http://www.cs.trinity.edu/~rjensen/temp/Wyman2011.htm

Bob Jensen's threads on business, finance, and accounting glossaries ---
http://www.trinity.edu/rjensen/Bookbus.htm 
 

2012 AAA Meeting Plenary Speakers and Response Panel Videos ---
http://commons.aaahq.org/hives/20a292d7e9/summary
I think you have to be a an AAA member and log into the AAA Commons to view these videos.
Bob Jensen is an obscure speaker following Rob Bloomfield
in the 1.02 Deirdre McCloskey Follow-up Panel—Video ---
http://commons.aaahq.org/posts/a0be33f7fc

2013 IFRS Blue Book (Not Free) ---
http://shop.ifrs.org/ProductCatalog/Product.aspx?ID=1717

Links to IFRS Resources (including IFRS Cases) for Educators ---
http://www.trinity.edu/rjensen/Theory01.htm#MethodsForSetting
 

Bob Jensen's threads on controversies in accounting standard setting ---
http://www.trinity.edu/rjensen/Theory01.htm#MethodsForSetting

American Accounting Association  Past Presidents are listed at
http://www.cs.trinity.edu/~rjensen/temp/PastPresidentsAAA.htm 

"2012 tax software survey:  Which products and features yielded frustration or bliss?" by Paul Bonner, Journal of Accountancy, September 2012 ---
http://www.journalofaccountancy.com/Issues/2012/Sep/20125667.htm

Center for Financial Services Innovation --- http://cfsinnovation.com/

Bob Jensen's taxation helpers ---
http://www.trinity.edu/rjensen/Bookbob1.htm#010304Taxation 

Subtle Distinctions in Technical Terminology
Machine Learning, Big Data, Deep Learning, Data Mining, Statistics, Decision & Risk Analysis, Probability, Fuzzy Logic FAQ ---
http://wmbriggs.com/blog/?p=6465

Today’s FBI: Facts and Figures 2013-2014—which provides an in-depth look at the FBI and its operations—is now available ---
http://www.fbi.gov/stats-services/publications/todays-fbi-facts-figures/facts-and-figures-031413.pdf/view

AICPA Fraud Resource Center --- Click Here
http://www.aicpa.org/INTERESTAREAS/FORENSICANDVALUATION/RESOURCES/FRAUDPREVENTIONDETECTIONRESPONSE/Pages/fraud-prevention-detection-response.aspx

Bob Jensen's Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm

Technical Tax Course Materials from Lexis-Nexus
Graduate Tax Series --- http://taxprof.typepad.com/files/graduate-tax-series-description-082911.pdf

CGMA Portfolio of Tools for Accountants and Analysts ---
http://www.cgma.org/Resources/Tools/Pages/tools-list.aspx
Includes ethics tools and learning cases.

Humor Between April 1-30, 2013 --- http://www.trinity.edu/rjensen/book13q2.htm#Humor043013

Humor Between March 1-31, 2013 --- http://www.trinity.edu/rjensen/book13q1.htm#Humor033113

Humor Between February 1-28, 2013 --- http://www.trinity.edu/rjensen/book13q1.htm#Humor022813

Humor Between January 1-31, 2013 --- http://www.trinity.edu/rjensen/book13q1.htm#Humor013113

Humor Between December 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q4.htm#Humor123112

Humor Between November 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q4.htm#Humor113012

Humor Between October 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q4.htm#Humor103112

Humor Between September 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q3.htm#Humor093012

Humor Between August 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q3.htm#Humor083112

Humor Between July 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q3.htm#Humor073112

Humor Between June 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q2.htm#Humor063012

Humor Between May 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q2.htm#Humor053112  

Humor Between April 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q2.htm#Humor043012

Humor Between March 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q1.htm#Humor033112  

Humor Between February 1-29, 2012 --- http://www.trinity.edu/rjensen/book12q1.htm#Humor022912 

Humor Between January 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q1.htm#Humor013112

Is the AAA Leadership Abandoning the AAA Commons?

How many of you heard about "Brilliantly Disguised Opportunities" until the cover story in the Winter 2013 Edition of Accounting Education News arrived in your snail mail boxes? That by the way is the theme of the 2013 forthcoming AAA Annual Meetings in Anaheim.

None of the recent past presidents of the AAA showed much interest in the Commons until they took office as Presidents-Elect and eventually President. But after being elected to this top office they actively used the AAA Commons as a primary vehicle for communicating with the AAA Membership. Mostly their postings were about AAA matters, although Sue Haka and Greg Waymire were inspired to post about their research interests as well.

Current President Karen Pincus has not had a single posting to the AAA Commons in 2013, although she had seven posts before becoming President.

President Elect Mary Barth as never had a single post to the Commons and never even posted a comment. Since Mary arguably is our leading accountics scientist,  I urged her to commence a Quant Corner on the Commons where editors of TAR, JAR, JAE, and other accountics science journal editors would encourage authors to post discussions about forthcoming articles in those journals. Mary never answered my appeal.

There's huge problem of inspiring any of our accountics scientists to become active in the Commons on behalf of accountics scientists ---
http://www.cs.trinity.edu/~rjensen/temp/AccounticsDamn.htm

My good friend A, Rashad Abdek-Khalik has a grand total of one posting to the Commons and that was a long time ago. He certainly is not a leading candidate for becoming President of the AAA on the basis of his Commons contributions. Competition from his opponent is more encouraging. Christine Botosan accumulated 88 postings and 14 comments on the Commons. Good work Kathy. If elected I look forward to even more postings. Update:  Christine Botosan won the election so maybe she will revive AAA Leadership interest in the Commons.

My intent here is not to make any of our current or future AAA leaders feel guilty about neglect of the Commons. They are very, very busy professors in other regards. However, the AAA is paying a lot of money to maintain the Commons, and I sense membership in the Commons is waning. The lack of interest of our current and future leaders, other than Christine Botosan, is certainly not helping to revive interest in the Commons.

Personally, I would rather go to the Commons more often to learn something instead of post something I already know. I am by far and above the most prolific professor posting the AAA Commons, but I take no pride in this. In retirement I would instead like to back off and let the younger generation overwhelm me with their postings to the Commons.

And the AAA leadership could certainly do more to encourage this expensive AAA resource. It is an expensive resource. Without more AAA leadership promotion and guidance I fear it's becoming wasted money.

April 13, 2013 reply from Dan Stone

Thanks Bob,

1. Do we really know the costs of AAA commons? Is this really an expensive resource? What evidence exists for this assertion?

2. I'm President of the AAA IS section. I've had trouble even getting the IS section leadership to use AAA commons. The reactions are that having to logon, and check another messaging source, is more trouble than it is worth, particularly in light of cloud sources (which don't require logons) for sharing online resources.

I'm not sure the AAA leadership is really the problem here. It may simply be that the commons was a good idea whose time never came (as is true of many, many technologies)..

April 14, 2013 reply from Bob Jensen

Hi Dan,

The Commons still has great potential for practitioners , researchers, and AAA leaders (including section and region presidents) to communicate with accounting teachers.

I'm still in favor of the Commons and feel that it was growing in popularity when AAA Presidents like Sue Haka were putting out messages that members wanted to access. It also helped when Julie Smith David, bless her heart, was putting out challenges for people to use the Commons.

Before dropping the Commons I would like to see the AAA leadership making a push to promote usage. I still like my idea of a Tech Corner where editors of our top accountics science journals arm twist authors with forthcoming articles to discuss their research in a language that communicates better with accounting teachers and practitioners.

When IFRS was front and center in curriculum revisions in the USA the large accounting firms, not just the Big Four, were putting up very helpful IFRS learning links as free teaching resources. I think we can get expanded activity from the large firms for other topics they would like to see in our college courses, topics that are not just in accounting.

I think there's still a chance for the Commons to be a very valuable resource. What we need is less Jensen and more members on the Commons. Jensen will gladly back off when members commence to post more and more to the Commons.

Respectfully,
Bob Jensen

The Downside of Fair Value Accounting for Money Funds

From the CFO.com Morning Ledger on April 30, 2013

Treasurers Hunt for Money Fund Alternatives

Corporate treasurers are hunting for alternatives to money-market funds as the SEC eyes reforms. The biggest concern is that money funds would have to report daily changes in the value of their underlying assets, which would make their share prices fluctuate, writes Vipal Monga in today’s Marketplace section. That could complicate accounting and leave companies facing potential tax liabilities.

Proponents of floating share prices say the shift would boost transparency. And any fluctuations in asset values aren’t expected to be dramatic. But treasurers worry that even a little bit of volatility would force them to track the value of the funds more closely, which could require more staff and upgrades in software and accounting systems. “The investor would need to keep track of the cost basis of each investment, and would have a tax liability to pay on any gain,” said Tom Deas, treasurer of chemical company FMC and chairman of the National Association of Corporate Treasurers.

Among the alternatives, some corporate treasurers are looking at separately managed accounts, which are custom-made investment vehicles run by money managers. “If money funds are forced to go to a floating NAV, we will see a lot of companies shift a larger portion of their balances to separately managed portfolios,” said Jerry Klein, managing director at investment adviser Treasury Partners. Even so, companies have found that it’s not easy to recreate the advantages of money funds—especially in terms of easy access to their cash.

"Amortized Cost Accounting is “Fair” for Money Market Funds," by Dennis R. Beresford, U.S. Chamber of Commerce Center for Capital Markets Competitiveness, Fall 2012
http://www.centerforcapitalmarkets.com/wp-content/uploads/2010/04/Money-Market-Funds_FINAL.layout.pdf

Summary

Recent events have caused the U.S. Securities and Exchange Commission (SEC) to rethink the long-standing use of amortized cost by money market mutual funds in valuing their investments in securities. This practice supports the use of the stable net asset value (a “buck” a share) in trading shares in such funds. Some critics have challenged this accounting practice, arguing that it somehow misleads investors by obfuscating changes in value or implicitly guaranteeing a stable share price.

This paper shows that the use of amortized cost by money market mutual funds is supported by more than 30 years of regulatory and accounting standard-setting consideration. In addition, its use has been significantly constrained through recent SEC actions that further ensure its appropriate use. Accounting standard setters have accepted this treatment as being in compliance with generally accepted accounting principles (GAAP). Finally, available data indicate that amortized cost does not differ materially from market value for investments industry wide. In short, amortized cost is “fair” for money market funds.

Background

Money market mutual funds have been in the news a great deal recently as the SEC first scheduled and then postponed a much-anticipated late August vote to consider further tightening regulations on the industry.1 Earlier, Chairman Mary Schapiro had testified to Congress about her intention to strengthen the SEC regulation of such funds, in light of issues arising during the financial crisis of 2008 when one prominent fund “broke the buck,” resulting in modest losses to its investors. Sponsors of some other funds have sometimes provided financial support to maintain stable net asset values. And certain funds recently experienced heavy redemptions due to the downgrade of the U.S. Treasury’s credit rating and the European banking crisis.

Money market funds historically have priced their shares at $1, a practice that facilitates their widespread use by corporate treasurers, municipalities, individuals, and many others who seek the convenience of low-risk, highly liquid investments. This $1 per share pricing convention also conforms to the funds’ accounting for their investments in short-term debt securities using amortized cost. This method means that, in the absence of an event jeopardizing the fund’s repayment expectation with respect to any investment, the value at which these funds carry their investments is the amount paid (cost) for the investments, which may include a discount or premium to the face amount of the security. Any discount or premium is recorded (amortized) as an adjustment of yield over the life of the security, such that amortized cost equals the principal value at maturity.

Some commentators have criticized the use of this amortized cost methodology and argued for its elimination. In a telling example of the passionate but inaccurate attention being devoted to this issue, an editorial in the June 10, 2012, Wall Street Journal described this longstanding financial practice in a heavily regulated industry as an “accounting fiction” and an “accounting gimmick.”

. . .

Reasoning for Use of Amortized Cost

The FASB has been considering various aspects of the accounting for financial instruments for approximately 25 years. During that time it has issued standards on topics such as accounting for marketable securities, accounting for derivative instruments and hedging, impairment, disclosure, and others. Also, the FASB has issued standards or endorsed standards issued by the AICPA of a specialized nature applying to certain industry groups such as investment companies, insurance companies, broker/dealers, and banks. Further, the FASB is presently involved in a major project that has encompassed approximately the past 10 years, whereby it is endeavoring to conform its standards on financial instruments to the related standards issued by the International Accounting Standards Board. Aspects of that project have stalled recently, and the two boards have reached different conclusions on certain key issues. Other aspects of that project are moving forward.

Over this 25-year period, probably the most controversial aspect of the financial instruments project has been to what extent those instruments should be carried at market or fair value in financial statements rather than historical cost. On several occasions the FASB has indicated a strong preference for fair value as a general objective. But there has been a great deal of opposition from many quarters, and the FASB has tended to determine the appropriate measurement attribute for particular instruments (fair value, amortized cost, etc.) in different projects based on the facts and circumstances in each case.

. . . (very long passages from this 21-page article are not quoted here)

Conclusion

Accounting for investment securities by money market mutual funds appropriately remains based on amortized cost. The amortized cost method of accounting is supported by the very short-term duration, high quality, and hold-to-maturity nature of most of the investments held. The SEC’s 2010 rule changes have considerably strengthened the conditions under which these policies are being applied. As a result of the 2010 SEC rule changes, funds now report the market value of each investment in a monthly schedule submitted to the SEC that is then made publicly available after 60 days. That provides additional information for investors. And the FASB’s current thinking articulates this accounting treatment as GAAP.

 

Jensen Comment
My main objection to booking fair values of HTM investments is that the interim adjustments for fair values that will never be realized destroys the income statement. Of course, the FASB and IASB have systematically destroyed the concept of net earnings in many other standards to a point where these standard setters can no longer even define net earnings.

The good news is that the FASB has a proposal to offset fair value adjustments of assets and liabilities to Other Comprehensive Income (OCI) instead of current earnings. Let's hope this becomes the rule of the land.

Research Studies from the Chamber's Center for Capital Markets ---
http://www.centerforcapitalmarkets.com/resources/publications/

From the CFO.com Morning Ledger on April 30, 2013

Herbalife struggles to find new auditor. Herbalife isn’t having an easy a time finding an auditor to replace KPMG, which resigned earlier this month in the wake of the scandal surrounding ex-partner Scott London. Skechers, the other company that KPMG had to drop, found a new auditor outside the Big 4 in BDO USA. Herbalife said in its quarterly filing on Monday that there can’t be assurance that it will be able to find a new auditor. Its “substantial international operations that require significant capacity and capabilities” mean the pool to choose from is limited. And it has historically used other big firms for tax, consulting and advisory work, which may, “in certain instances, impair the ability of certain firms to serve as our independent registered public accounting firm.” Until a new auditor can vouch for its financials, Herbalife will be ineligible to use shelf and other registration statements that incorporate its financials as reference. CFOJ will be diving deeper into this topic later today, so stay tuned.

Jensen Question
High risk drivers are assigned to risk pools where automobile insurance companies are forced (for higher prices) to share drivers in those risk pools. Will this one day happen to high risk audit clients?

$53,300: The Average Starting Salary for New Accounting Grads (in 2013) ---
http://www.naceweb.com/salary-survey-data/?referal=research&menuID=71&nodetype=4

Jensen Comment
I think such starting salary surveys are highly misleading unless they also show cost of living adjustments. A starting salary of $53,300 will go a lot further in San Antonio than in San Francisco, NYC, Los Angeles, and Honolulu where people earning $53,300 should probably get food stamps and subsidized housing.

I would go to work for $20,000 if the starting job had world class training and exposures to clients thirsting to hire away CPAs from top accounting firms.

It's all about windows of opportunity that trump starting salaries in nearly every instance.

I would not opt for an MBA program were graduates have average starting salaries of $143,800 (and a high standard deviation and kurtosis) relative to a Masters of Accounting Program where average starting salaries are $53,300 with a small standard deviation and negligible kurtosis. By kurtosis I mean that a few superstar graduates (such as those with whiz-kid computer science undergraduate degrees from elite universities) with starting salaries over $250,000 are skewing the average.

There are also misleading "expected" compensations contingent upon such things as sales. For example, a marketing or finance job may look great when told that last year's hires earned an average of $143,800 with commissions and bonuses thrown in. But what about those that came in below average because they just had a harder time selling products and services?

Please warn students that the most important thing about a new job is not the anticipated salary. It's the anticipated opportunity with a few other factors thrown in such as tension, long hours, geographic location, and constant travel. For example, a CPA firm may pay double for going to Moscow, but do you really want to start your career in Moscow where it's really dangerous on the streets and housing is rather Spartan?

"Ten career tips for young CPAs," by Mark Ursick, cpa2biz, February 25, 2013 ---
http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2013/CPA/Feb/BuildCareers.jsp

Jensen Comment
I especially agree with:  "Don’t limit your challenges; challenge your limits."

The most gung ho student I ever had studying the accounting for derivative financial instruments and hedging strategies never limited his challenges even though he was less gifted than some of my students. He just worked and worked and worked as a student.

His first job was with a Big Four firm in Houston and within three years he was the technical guy who virtually was in charge on an audit of a company that had over $1 billion in derivatives. He's since moved on to become a leading executive at Microsoft.

In contrast I had more brilliant students who got buy in my accounting theory course but would run like somebody yelled "Fire" if they had an opportunity to audit derivative financial instruments contracts. They never became executives in any companies.

The downloadable Robert Half salary guide ---. http://www.roberthalf.com/SalaryGuide 

Bob Jensen's threads on careers ---
http://www.trinity.edu/rjensen/Bookbob1.htm#careers

"Making Board Games in the Classroom," by Anastasia Salter, Chronicle of Higher Education, April 29, 2013 ---
http://chronicle.com/blogs/profhacker/making-board-games-in-the-classroom/48983?cid=wc&utm_source=wc&utm_medium=en

I just got home from THATCamp Games II at Case Western Reserve University, where we played and made a lot of games. In the past I’ve talked about making games for the classroom using lots of technologies (Inform 7, inklewriter, Twine, Scratch), but games don’t require any computing power to be great. Physical board and card games can be powerful systems of representation and more immediately accessible for exploring something in a classroom. This might bring back made memories for some of us of classroom jeopardy–but when the mechanics of the game fit the content, it can be much more powerful than that.

During THATCamp Games II I taught a crash course workshop in making educational board games. Here’s the full Prezi from the workshop. The same basic process can be used for designing a game for a lesson or in asking students to make a game, which itself can provoke a different way of thinking about an idea. Here’s an overview of the process we used:

Phase One: Imagine

1. Brainstorm an educational objective
2. Choose a central mechanic
3. Clarify your theme and concept

Most of us learned through board games at some point–even if it was the foundations of capitalism in Monopoly, a reductive version of the American dream in the Game of Life, or just color recognition from Candyland. But board games can address much more complex topics: Pandemic models cooperative disaster response to the spreading of infectious diseases; Eco Fluxx poses questions of environmentalism through a changing rules system; and there’s even an Umberto Eco: The Name of the Rose board game.

A straightforward goal–a purpose behind the game–works best when it can clearly be connected with the game. One of the teams during the workshop chose creative thinking and connected it with competitive challenges, as seen in the prototype above for “Think. Build. Tell.” These mechanics can then be interwoven with a theme, ideally in a way that strengthens both. For instance, a rebranded version of Monopoly may have a new “theme”, but it doesn’t really change gameplay–while moving a strategy game to a different era often rewrites all the rules.

Phase Two: Make

1. Imagine your game space metaphor
2. Design your system and pieces
3. Prototype your playable design

There are lots of ways to think of game boards, but all of them have to represent something complex in a simple way. Most of them do that through using a visual metaphor–Monopoly simplifies the city to a single block, Sorry uses complete abstraction, The Game of Life conflates movement through space with movement through stages of life. One way to jumpstart game design thinking is to take all the pieces of a game box and throw away the rules, then imagine a new ruleset that makes all those pieces work together. This helps us explore how all the pieces of a physical game combine to form a system–it’s a lot more transparent than most video games.

Continued in article

Gamification --- http://en.wikipedia.org/wiki/Gamification

"Why Gamification is Really Powerful," by Karen Lee, Stanford Graduate School of Business, September 2012 ---
http://stanfordbusiness.tumblr.com/post/32317645424/why-gamification-is-really-powerful
Karen Lee is the Social Web Strategist at the Stanford GSB

"How Deloitte Made Learning a Game," by Jeanne C. Meister, Harvard Business Review Blog, January 2, 2013 --- Click Here
http://blogs.hbr.org/cs/2013/01/how_deloitte_made_learning_a_g.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

"Games in the Classroom (part 4)," by Anastasia Salter, Chronicle of Higher Education, October 6, 2011 ---
http://chronicle.com/blogs/profhacker/games-in-the-classroom-part-4/36294?sid=wc&utm_source=wc&utm_medium=en

Bob Jensen's threads on Edutainment ---
http://www.trinity.edu/rjensen/000aaa/thetools.htm#Edutainment

"Europe imposes mandatory (14 to 25 year) rotation on audits," by Rachael Singh, AccountancyAge, April 25, 2013 ---
http://www.accountancyage.com/aa/news/2264090/europe-imposes-mandatory-rotation-on-audits

It's anywhere from 14-25 years and can vary by individual EU member state rules
http://www.foxbusiness.com/news/2013/04/24/eu-lawmakers-in-tentative-deal-on-accounting-cap-sources/

Seems to be 14 years where member EU states can extend the tenure of the audit firm to 25 years
From the CFO.com Morning Ledger on April 26, 2013

EU committee backs watered-down plan on auditor rotation. Bold plans to shake up the European audit market are being scaled back after a group of influential EU lawmakers backed compulsory rotation of auditors only every 25 years, the FT reports. The European Parliament’s legal affairs committee endorsed a watered-down version of the auditing reforms proposed in 2011 by the European Commission, which wanted audit-firm rotation every six to 12 years. It also rejected the commission’s proposal for a crackdown on auditors doing additional work, which had raised the prospect of a breakup of one or more of the Big Four.

Jensen Comment
It is not at all certain whether Europe has the jurisdiction to impose audit firm rotation on multinationals headquartered outside of Europe. For example, General Electric does a lot of business in Europe. However, it's worldwide headquarters is in the USA, and it does the majority of its business outside Europe.

Can Europe force the USA-based General Electric to drop (after 25 years) KPMG  that has audited GE since the beginning of time?

Will this effectively impose 25-year audit firm rotation on the entire world?
I doubt that this will  narrowly apply to multinational corporations headquartered in Europe since this might trigger a mass exodus of corporate headquarters.

This could be a boon to medium-sized audit firms who want to join the big leagues since the large audit firms will probably shed clients up for rotation because the audit fees are just not worth the startup costs and relocation costs for auditors.

But turning medium-sized firms into large firms will be costly, especially in terms of auditing clients with very complicated contracts like big banks, multinational corporations, insurance companies, etc.

It will be an enormous boon to accounting education programs since turnover of auditors is going to be enormous, thereby creating huge demand for new graduates in accounting.

Personally I think the law will be rescinded in the next 25 years after lawmakers come to their senses on what this will really cost in terms of setup taking on enormous clients like General Electric. An added consideration will be on how it makes being in the audit profession less desirable with prospects of having to become gypsies without homes. Rather than move many senior auditors may simply go to work for clients or other companies rather than face the transactions costs of having to sell homes, take children out of schools, etc. Audit firms will either lose their best auditors or have to double their salaries as incentives to stay with the audit firms.

Bob Jensen's threads on the disastrous (in terms of audit costs and gypsy lifestyles required for auditors) proposal to require audit firm rotation ---
http://www.trinity.edu/rjensen/Fraud001c.htm#Rotation

From the CFO.com Morning Ledger on April 29, 2013

Debate grows over corporate tax havens
The FT takes a deep dive into the growing global anger over corporate tax avoidance. There has been a blurring of the distinctions between tax havens and larger industrialized countries that use fiscal measures as a source of competitive advantage to secure investment, jobs and revenues, writes Vanessa Houlder. Economies such as the Netherlands and Ireland have sucked up corporate investment by helping companies avoid—entirely legally—hefty tax bills at home. The Netherlands and Luxembourg had booked foreign direct investment of $5.8 trillion by the end of 2012—more than the U.S., U.K. and Germany combined. Meanwhile, the OECD is warning of a “race to the bottom” on corporate taxes.

Teaching Case from The Wall Street Journal Accounting Weekly Review on April 26, 2013

Attention Online Shoppers: Senate Weighs Sales-Tax Bill
by: John McKinnon and Siobhan Hughes
Apr 22, 2013
Click here to view the full article on WSJ.com
Click here to view the video on WSJ.com 
 

TOPICS: sales tax

SUMMARY: "The Senate is expected to vote as soon as this week on legislation allowing states to require Internet retailers to collect sales taxes.... Online retail sales totaled $169 billion in 2010, about 4.4% of total retail sales.... From 2002 to 2010, such sales rose at an average annual rate of 18%, compared with 2.6% for total retail sales. " States are therefore focusing on Internet sales rather than catalogue retailers because the Internet sales are growing so much faster.

CLASSROOM APPLICATION: The article may be used in a tax class, in a financial accounting class covering sales taxes, or in an MBA class.

QUESTIONS: 
1. (Advanced) Who is responsible for paying sales taxes? How are sales taxes collected and remitted? To what governing authorities in the U.S. are they remitted?

2. (Introductory) What proposed new tax law related to online sales has been moving through the U.S. Senate this week?

3. (Advanced) Why has the Senate proposed this bill with an exemption for smaller retailers? In your answer, include the definition of "smaller retailer" that is included in the Senate proposed legislation.

4. (Introductory) Why does online retailer Amazon support the legislation?

5. (Advanced) Why do you think this Senate bill focuses on online retail sales but not catalogue retailers?
 

SMALL GROUP ASSIGNMENT: 
Group discussion (may vary according to the mix of in-state, out-of-state, and international students in the class): 1. Compare the sales tax rates applied in your home state or home country. 2. How would your state legislator estimate the amount of tax losses being incurred in your home state or country because of untaxed internet sales?

Reviewed By: Judy Beckman, University of Rhode Island

"Attention Online Shoppers: Senate Weighs Sales-Tax Bill," by John McKinnon and Siobhan Hughes, The Wall Street Journal, April 22, 2013 ---
http://online.wsj.com/article/SB10001424127887323551004578437040452142034.html?mod=djem_jiewr_AC_domainid

The Senate is expected to vote as soon as this week on legislation allowing states to require Internet retailers to collect sales taxes, opening up a battle over a tax break that consumers love but that states say costs millions.

The outcome is uncertain, largely because of opposition from some conservatives who see the move as a new tax and an unfair burden on business, and from lawmakers from states that don't tax sales.

But Senate Majority Leader Harry Reid's decision to move to a procedural vote on the proposal suggests its prospects are improving. In a nonbinding vote last month, senators approved a broadly worded resolution of support for the idea by a wide margin, 75-24. Conservative opposition has appeared to splinter, as more lawmakers see the growth in online sales as a major source of revenue.

A 1992 U.S. Supreme Court ruling held that states can't force retailers to collect sales tax unless they have a physical presence—such as a warehouse or store—within their borders. Consumers are supposed to pay tax themselves, but few do; states seldom pursue those who don't.

State officials say catalog sales by out-of-state merchants also cost them revenue, but online sales are a bigger worry. Online retail sales totaled $169 billion in 2010, about 4.4% of total retail sales, according to the U.S. Census Bureau. From 2002 to 2010, such sales rose at an average annual rate of 18%, compared with 2.6% for total retail sales.

Governors estimate state and local governments lose about $20 billion a year in sales-tax revenue because of online sales. Brick-and-mortar retailers have argued that tax-free sales give online retailers an unfair edge.

Supporters of the legislation—which would affect some mail-order sales as well—say it would help states collect taxes that are already owed.

Backing by high-profile former and current GOP governors, including Haley Barbour of Mississippi and Bob McDonnell of Virginia, has given the measure a boost. "As we started getting some Republican governors…Republican senators got more comfortable," said Dan Crippen, executive director of the National Governors Association.

Support from a few big online retailers, notably Amazon.com Inc., AMZN -7.81% also has helped. Amazon has said it supports a national online sales tax, and a spokesman said the company is in favor of the Senate bill, known as the Marketplace Fairness Act. The company often has opposed state-by-state legislation, instead brokering deals to build new distribution centers in certain states.

But some online retailers warn the legislation could create significant new regulatory burdens on small businesses that sell over the Internet. EBay Inc. EBAY +0.34% on Sunday said it sent tens of millions of emails urging its active U.S. sellers to push for changes to Congress's sales-tax bill. EBay said the bill's sales threshold for triggering the tax is too low.

"The legislation treats you and big multi-billion dollar online retailers—such as Amazon—exactly the same," said John Donahoe, eBay's chief executive, in one of the emails. He said only businesses with at least $10 million in annual out-of-state sales, or 50 or more employees, should qualify for sales tax, compared with the $1 million sales threshold in the bill.

Forcing businesses to comply with tax laws of other states "is an incredible precedent to set right now," said Jim DeMint, a former Republican senator from South Carolina who now is president of the conservative Heritage Foundation. He added, "it violates federalism" to require businesses in one state to collect taxes for another.

Sen. Max Baucus (D., Mont.), Finance Committee chairman, said he opposes the bill because it could hurt businesses in his state, which has no sales tax. He said in an interview he hopes it can be improved through amendments. The decision to vote on the measure without full consideration by Mr. Baucus's committee could generate opposition.

A top Senate Democratic aide predicted that the legislation would pass the Senate, but even supporters worry that opposition could grow if the bill remains pending too long. Sixty votes would be needed to overcome a filibuster threat.

Continued in article

"Everything Is Rigged: The Biggest Price-Fixing Scandal Ever:   The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix," by Matt Taibbi, Rolling Stone, April 25, 2013 ---
http://www.rollingstone.com/politics/news/everything-is-rigged-the-biggest-financial-scandal-yet-20130425

Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything.

You may have heard of the Libor scandal, in which at least three – and perhaps as many as 16 – of the name-brand too-big-to-fail banks have been manipulating global interest rates, in the process messing around with the prices of upward of $500 trillion (that's trillion, with a "t") worth of financial instruments. When that sprawling con burst into public view last year, it was easily the biggest financial scandal in history – MIT professor Andrew Lo even said it "dwarfs by orders of magnitude any financial scam in the history of markets."

That was bad enough, but now Libor may have a twin brother. Word has leaked out that the London-based firm ICAP, the world's largest broker of interest-rate swaps, is being investigated by American authorities for behavior that sounds eerily reminiscent of the Libor mess. Regulators are looking into whether or not a small group of brokers at ICAP may have worked with up to 15 of the world's largest banks to manipulate ISDAfix, a benchmark number used around the world to calculate the prices of interest-rate swaps.

Interest-rate swaps are a tool used by big cities, major corporations and sovereign governments to manage their debt, and the scale of their use is almost unimaginably massive. It's about a $379 trillion market, meaning that any manipulation would affect a pile of assets about 100 times the size of the United States federal budget.

It should surprise no one that among the players implicated in this scheme to fix the prices of interest-rate swaps are the same megabanks – including Barclays, UBS, Bank of America, JPMorgan Chase and the Royal Bank of Scotland – that serve on the Libor panel that sets global interest rates. In fact, in recent years many of these banks have already paid multimillion-dollar settlements for anti-competitive manipulation of one form or another (in addition to Libor, some were caught up in an anti-competitive scheme, detailed in Rolling Stone last year, to rig municipal-debt service auctions). Though the jumble of financial acronyms sounds like gibberish to the layperson, the fact that there may now be price-fixing scandals involving both Libor and ISDAfix suggests a single, giant mushrooming conspiracy of collusion and price-fixing hovering under the ostensibly competitive veneer of Wall Street culture.

The Scam Wall Street Learned From the Mafia

Why? Because Libor already affects the prices of interest-rate swaps, making this a manipulation-on-manipulation situation. If the allegations prove to be right, that will mean that swap customers have been paying for two different layers of price-fixing corruption. If you can imagine paying 20 bucks for a crappy PB&J because some evil cabal of agribusiness companies colluded to fix the prices of both peanuts and peanut butter, you come close to grasping the lunacy of financial markets where both interest rates and interest-rate swaps are being manipulated at the same time, often by the same banks.

"It's a double conspiracy," says an amazed Michael Greenberger, a former director of the trading and markets division at the Commodity Futures Trading Commission and now a professor at the University of Maryland. "It's the height of criminality."

The bad news didn't stop with swaps and interest rates. In March, it also came out that two regulators – the CFTC here in the U.S. and the Madrid-based International Organization of Securities Commissions – were spurred by the Libor revelations to investigate the possibility of collusive manipulation of gold and silver prices. "Given the clubby manipulation efforts we saw in Libor benchmarks, I assume other benchmarks – many other benchmarks – are legit areas of inquiry," CFTC Commissioner Bart Chilton said.

But the biggest shock came out of a federal courtroom at the end of March – though if you follow these matters closely, it may not have been so shocking at all – when a landmark class-action civil lawsuit against the banks for Libor-related offenses was dismissed. In that case, a federal judge accepted the banker-defendants' incredible argument: If cities and towns and other investors lost money because of Libor manipulation, that was their own fault for ever thinking the banks were competing in the first place.

"A farce," was one antitrust lawyer's response to the eyebrow-raising dismissal.

"Incredible," says Sylvia Sokol, an attorney for Constantine Cannon, a firm that specializes in antitrust cases.

All of these stories collectively pointed to the same thing: These banks, which already possess enormous power just by virtue of their financial holdings – in the United States, the top six banks, many of them the same names you see on the Libor and ISDAfix panels, own assets equivalent to 60 percent of the nation's GDP – are beginning to realize the awesome possibilities for increased profit and political might that would come with colluding instead of competing. Moreover, it's increasingly clear that both the criminal justice system and the civil courts may be impotent to stop them, even when they do get caught working together to game the system.

If true, that would leave us living in an era of undisguised, real-world conspiracy, in which the prices of currencies, commodities like gold and silver, even interest rates and the value of money itself, can be and may already have been dictated from above. And those who are doing it can get away with it. Forget the Illuminati – this is the real thing, and it's no secret. You can stare right at it, anytime you want.

Continued in article

Bob Jensen's Rotten to the Core threads on the banking industry ---
http://www.trinity.edu/rjensen/FraudRotten.htm#InvestmentBanking

GOVERNMENTAL ACCOUNTING RESEARCH SYSTEM ONLINE - NOW AVAILABLE ---
http://www.accountingeducation.com/index.cfm?page=newsdetails&id=152425

More on how to lie with statistics, tables, and graphs
"Did Reinhart-Rogoff Screw Up Their Debt Research?" by Barry Ritholtz, April 16th, 2013 ---
http://www.ritholtz.com/blog/2013/04/did-reinhart-rogoff-screw-up-their-debt-research/

"How much of Reinhart/Rogoff has survived?" by Gavyn Davies, Financial Times, April 19, 2013 ---
http://blogs.ft.com/gavyndavies/2013/04/19/how-much-of-reinhartrogoff-has-survived/?

. . .

However, if the economy is working well below capacity, a rise in the budget deficit may not raise interest rates, but may instead raise aggregate demand and thus boost GDP growth. Under some circumstances, this might even reduce the debt ratio for a while.

In summary, the most dramatic version of the RR stylised fact is no longer a stylised fact. RR were right to argue that, over most normal periods, higher public debt has been associated with lower real GDP growth rates, but a sudden discontinuity at 90 per cent is not proven. Furthermore, causation might work in both directions, depending on economic circumstances. The timing of these effects is not a definitive indicator of true causation, and the relationship may be very different in a time of full employment from a time of high unemployment.

The moral of this story is that it is an illusion to expect that the complicated relationship between public debt and GDP growth will always and everywhere be the same.

More on how to lie with statistics, tables, and graphs
"Did Reinhart-Rogoff Screw Up Their Debt Research?" by Barry Ritholtz, April 16th, 2013 ---
http://www.ritholtz.com/blog/2013/04/did-reinhart-rogoff-screw-up-their-debt-research/

"Reinhart, Rogoff, and How the Macroeconomic Sausage Is Made," by Justin Fox, Harvard Business Review Blog, April 17, 2013 --- Click Here
http://blogs.hbr.org/fox/2013/04/reinhart-rogoff-and-how-the-ma.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

After watching a presentation by Kaggle founder and CEO Anthony Goldbloom at a conference last year, I went up to the front of the room to ask him a question about macroeconomics.

Kaggle organizes competitions in which data scientists (which in most cases means anybody who wants to sign up) compete to build predictive models based on huge troves of data. Goldbloom founded the company after working as a macroeconomic modeler at the Reserve Bank of Australia and the Australian Treasury.

"Could you use the Kaggle approach to make macroeconomic predictions?" I asked him.

"No," he replied. "Not nearly enough data."

I couldn't help but think back to that as controversy erupted this week over Harvard economists Carmen Reinhart and Kenneth Rogoff's oft-cited three-year-old finding that economic growth plummets when a country's debt-to-GDP ratio exceeds 90%. Three University of Massachusetts economists — Thomas Herndon, Michael Ash, and Robert Pollin — came out with a working paper that recrunched the Reinhart and Rogoff data set and arrived at a very different result: instead of average -0.1% growth in countries with debt/GDP of more than 90%, they came up with 2.2% growth.

Most of the attention since then has focused on an Excel error that Herndon, Ash, and Pollin found — which caused five countries to be excluded from the analysis — and Reinhart and Rogoff have subsequently acknowledged. That's pretty embarrassing, but it only changed the result by 0.3 percentage points. Most of the difference had to do instead with how Reinhart and Rogoff weighted the results from different countries. They chose to give each country's average growth in a particular debt/GDP range the same weight, regardless of how many years the country had been in that situation. As Herndon-Ash-Pollin write, this isn't an indefensible approach (they do argue that Reinhart and Rogoff should have devoted a lot more ink to defending it). But by taking a different approach, and instead weighting countries' results by how many years they were above 90% debt/GDP, they were able to get a very different result.

This is watching the sausage of macroeconomics being made. It's not appetizing. Seemingly small choices in how to handle the data deliver dramatically different results. And it's not hard to see why: The Reinhart-Rogoff data set, according to Herndon-Ash-Pollin's analysis, contained just 110 "country-years" of debt/GDP over 90%, and 63 of those come from just three countries: Belgium, Greece, and the UK.

This is a problem inherent to macroeconomics. It's not like an experiment that one can run multiple times, or observations that can be compared across millions of individuals or even hundreds of corporations. In the words attributed to economist Paul Samuelson, "We have but one sample of history." And it's just not a very big sample.

So what to do about it? One response is to dig for more data, and Reinhart and Rogoff have been doing that, going back to 1800 to examine episodes of public debt overhangs. Another is to have different people crunch it in different ways, which is what Herndon-Ash-Pollin did, or assemble different data sets, as several other scholars have done.

But the biggest challenge may be how to present it. My reading of Reinhart-Rogoff, Herndon-Ash-Pollin, and the other papers linked to in the preceding paragraph is that rising debt loads do weigh on growth. Yes, there's causation at work in both directions: low growth results in bigger debts — which has clearly been the case in the U.S. over the past couple of years. But attempts to separate that effect out by looking at growth rates well after a spike in debt do indicate slower growth after higher debt. And for economists of every school but so-called modern monetary theory, it's logical that big debts would eventually eat up resources and slow growth.

What there isn't, though, is an obvious tipping point where debt becomes too high, and deficit spending becomes a drag rather than a stimulus. At least not one that's obvious before the fact. The initial Reinhart-Rogoff research seemed to indicate a sharp dropoff in average growth after debt passed 90% of GDP. But they also reported a significantly smaller dropoff in median growth, and their subsequent analyses, as well as the Herndon-Ash-Pollin rework of their data, similarly show a dropoff but not a dramatic inflection point.

In the 1990s, the consensus seemed to be that for the U.S. the inflection point was a public debt/GDP ratio of 50% — which is exactly what the country was nearing at the time. Higher than that, and the bond market vigilantes would punish the U.S. with much higher interest rates on government debt. The central teaching of what came to be known as Rubinomics was that cutting the deficit would actually stimulate the economy as it brought interest rates down.

Now, of course, U.S. public debt is up to 76% of GDP, yet the bond market vigilantes all seem to have retired or moved to Europe. In the long aftermath of a global financial crisis, with deflation a real threat, the U.S. can get away with running huge deficits with no immediate consequence. In fact, the Keynesian reasoning goes, big deficits now will lead to a better long run growth picture (and thus lower future debt/GDP ratios).

Is this reasoning correct? Well, right now the evidence would seem to support it: The U.S. is muddling through, while austerity measures have pushed Europe back into recession and most of Southern Europe into depression. For whatever it's worth, Reinhart and Rogoff have advocated continued deficit spending too — at least for now.

But this is macroeconomics. It's hard to muster conclusive evidence, and almost impossible to generate much in the way of useful predictive ability. One response to this fog would be to throw up our hands and not do anything at all. Another is to acknowledge that our knowledge is limited and proceed anyway on a mix of data, theory, and intuition.

This, to a certain extent, is what the Reinhart-Rogoff project of the past few years (most notably their book This Time is Different) has been all about. It's a combination of history, data-crunching, and informed opinion — intended to be consumed and debated by an audience of far beyond academic macroeconomics. Which is exactly what's happening now. That can't be a bad thing, can it?

Continued in article

April 19, 2013 reply from Bob Jensen

Hi Tom,

I fully agree with respect to pressures by journal editors to replicate. But how often does this happen in accountics science? If the journal editors were going to insist on tempting other (independent) researchers to replicate they would have to offer something worthwhile like a promise to publish the replications. Instead journals like TAR have a practice of not publishing replications or even commentaries about accountics science findings.

In real science most journals will publish something regarding exact replications, such as publishing abstract summaries of replication outcomes commentaries.. TAR referees are not willing to do this as far as I can tell ---
http://www.trinity.edu/rjensen/TheoryTAR.htm 

Bill Cooper and I collaborated on changing the AAA journal policy on data availability. We were both on the AAA Executive Committee at the time. As a result the policy was instigated that AAA authors would be requested to make data available for published studies if that data was not already in the public realm. It is now somewhat common for authors to make private data available, but nothing much seems to come of this in accountics science due to lack of incentives to perform replications.

The R&R macroeconomic study that commenced this thread should have been replicated early on because it was known from the beginning that it would probably affect real world policies and decisions. Very few accountics science studies are of such importance in the accounting profession. Put another way, accountics science studies seldom provide evidence that is not already known in the profession.

For example, finance professor Eric Lie at the University of Iowa won the AAA's Notable Contributions to the Literature Award for his empirical study of options back dating. This was a great accountics scuence contribution, but by the time it was published it was widely known that corporate executives were commonly back dating options for their compensation. The rules against such backdating were already being changed.

What we would like from accountics science is replicated research that's very interesting to the accounting profession because it reveals something of importance to practitioners and standard setters that they don't already know. Since the 1970s we've been waiting and waiting for this to happen in accountics science. Sigh!

Respectfully,
Bob Jensen

 

"Excel Tip: Use Conditional Formatting to Identify Unlocked Cells," by David Ringstrom, AccountingWeb, April 19, 2013 ---
http://www.accountingweb.com/article/excel-tip-use-conditional-formatting-identify-unlocked-cells/221617?source=technology

Russell Golden to Become the Next Chairman of the FASB
Financial Accounting Standards Board member Russell Golden will succeed Leslie Seidman as chairman July 1, after Seidman's term ends. Golden joined the FASB as a senior technical adviser in 2004 and rose through the ranks to become staff technical director, then was appointed to the board in 2010
http://journalofaccountancy.com/News/20137845.htm

Russell Golden, whose technical expertise as a FASB staff member led him to a spot on the standard-setting board in 2010, will succeed Leslie Seidman as FASB’s chairman on July 1.

The Financial Accounting Foundation (FAF) announced Golden’s appointment Tuesday. FAF Chairman Jeffrey Diermeier said in a news release that Golden is the most qualified person for the role after a search that included the evaluation of many strong candidates from a variety of backgrounds.

“He will bring to his new position a deep understanding of technical accounting issues informed by a broad appreciation of the larger environment in which the FASB operates,” Diermeier said.

Golden joined FASB’s staff in 2004 and worked a total of six years in various staff positions before being appointed to the board in 2010. He was reappointed to a second, five-year term in July 2012.

He served as FASB’s technical director from 2008 to 2010, overseeing staff work on standards-level projects, and chaired the board’s Emerging Issues Task Force. Golden joined the FASB staff in 2004 after serving as a partner at Deloitte & Touche LLP in the National Office Accounting Services department, where he provided accounting consultations to partners and clients globally.

He previously held other positions within Deloitte & Touche LLP. He earned his bachelor’s degree from Washington State University and is a licensed CPA in the states of Washington and Connecticut.

AICPA President and CEO Barry Melancon, CPA, CGMA, said in a statement that the Institute is pleased with Golden’s selection.

”Russ has been a true thought leader,” Melancon said, “and in his time with the FASB has demonstrated a total commitment to improving financial reporting, which ultimately serves the public interest. We congratulate Russ and look forward to working with him.”

Seidman’s term expires at the end of June. She has served as FASB’s chairman since December 2010, and has been a member of the board since July 2003.

The issues facing FASB as Golden prepares to take over as chair include:

• Completing the standard-setting phase with the issuance of a final standard on revenue recognition that is expected within a few months in a convergence project with the International Accounting Standards Board.
• Pushing forward with convergence projects on leases, financial instruments, and insurance.
• Working with the new Private Company Council as it debates possible GAAP exceptions and modifications for private companies.
• Developing a disclosure framework that more succinctly communicates relevant information to financial statement users.

Continued in article

Teaching Case from The Wall Street Journal Accounting Weekly Review on April 26, 2013

Accounting Board Taps Chairman
by: Michael Rapoport and Emily Chasan
Apr 24, 2013
Click here to view the full article on WSJ.com
 

TOPICS: Financial Accounting Standards Board

SUMMARY: Russell Golden was named chairman of the Financial Accounting Standards Board.... [He] is currently a member of FASB...and formerly was a...senior staffer." Prior to joining the FASB he was a partner with Deloitte & Touche. He has accomplished these career milestones at only 42 years of age.

CLASSROOM APPLICATION: The article may be used in any class to introduce the U.S. standards setting body, its structure, and its members.

QUESTIONS: 
1. (Introductory) Who is the new chairman of the Financial Accounting Standards Board (FASB)? Describe his professional background.

2. (Introductory) Why did the former chairwoman, Leslie Seidman, step down from her role?

3. (Advanced) Access the FASB website at www.fasb.org. Click on the tab "About FASB," then on "Our People" on the left hand column. How many board members are there? From what backgrounds do they come?

4. (Advanced) Click on the tab "Financial Accounting Foundation" and then on the tab "About FAF." What is the FAF? How does this organization's purpose lead it to have been the one to select the new FASB chairman?
 

Reviewed By: Judy Beckman, University of Rhode Island

"Accounting Board Taps Chairman," by Michael Rapoport and Emily Chasan, The Wall Street Journal, April 24, 2013 ---
http://online.wsj.com/article/SB10001424127887324235304578441071573710666.html?mod=djem_jiewr_AC_domainid

Russell Golden was named chairman of the Financial Accounting Standards Board, putting him at the center of the debate about how much the U.S. should change its accounting rules to reflect the standards used in most other countries.

Mr. Golden is currently a member of FASB, which sets accounting rules for U.S. companies, and formerly was a FASB senior staffer. He will assume the chairman's post in July for a four-year term, succeeding Leslie Seidman, who is stepping down because she has served 10 years on the board, the longest board rules permit.

"I'm just ecstatic about this," said Robert Herz, a former FASB chairman who worked with Mr. Golden when he was on FASB's staff. "He's extremely well-rounded and technically very good. He's got a lot of common sense."

In a statement Tuesday, Mr. Golden said he was "honored" to be chosen and that he would strive to put investors' needs first and work to make financial reporting "as clear, transparent and useful as possible."

Mr. Golden was appointed to the chairman's post by the trustees of the Financial Accounting Foundation, which oversees and finances FASB.

The biggest issue facing Mr. Golden, as it has been for Ms. Seidman, is "convergence," the push to bring U.S. and global accounting rules closer together. FASB and its global counterpart, the International Accounting Standards Board, have been trying for years to eliminate major differences between U.S. generally accepted accounting principles, or GAAP, which U.S. companies follow, and International Financial Reporting Standards, or IFRS, in use in most of the rest of the world.

But those attempts have been marked by delays and sometimes disagreements between the two rule-making bodies. Some of the key projects on which the two boards are trying to agree, including new rules on revenue recognition and lease accounting, still haven't been completed, nearly two years after they were originally slated to be done. The Securities and Exchange Commission has yet to make a decision on whether to shift U.S. companies over to the global rules altogether.

In a conference call with reporters, Mr. Golden said he was "committed to working through these issues to arrive at a converged solution."

IASB Chairman Hans Hoogervorst said Mr. Golden is "an excellent choice" who "commands great respect among all of our board members."

Mr. Golden, 42 years old, has been a FASB member since 2010 and before that had served on FASB's staff since 2004, including two years as technical director, overseeing the staff's work on rule-making projects. Before joining FASB, he was a partner at Deloitte & Touche LLP, one of the Big Four accounting firms.

The foundation, aided by search firm SpencerStuart, has been looking for a successor for Ms. Seidman since last fall. More than 100 candidates were considered, said Robert Stewart, a FASB spokesman.

Continued in article

The New Yorker:
From maids to roofers to drug dealers the underground economy resulted in an estimated $2 Trillion (with a T) of underreported taxable income in 2012
Unemployment and Welfare Fraud
"The Underground Recovery," by James Surowiecki," The New Yorker, April 29, 2013 ---
http://www.newyorker.com/talk/financial/2013/04/29/130429ta_talk_surowiecki

When we all finished filing our tax returns last week, there was a little something missing: two trillion dollars. That’s how much money Americans may have made in the past year that didn’t get reported to the I.R.S., according to a recent study by the economist Edgar Feige, who’s been investigating the so-called underground, or gray, economy for thirty-five years. It’s a huge number: if the government managed to collect taxes on all that income, the deficit would be trivial. This unreported income is being earned, for the most part, not by drug dealers or Mob bosses but by tens of millions of people with run-of-the-mill jobs—nannies, barbers, Web-site designers, and construction workers—who are getting paid off the books. Ordinary Americans have gone underground, and, as the recovery continues to limp along, they seem to be doing it more and more.

Measuring an unreported economy is obviously tricky. But look closely and you can see the traces of a booming informal economy everywhere. As Feige said to me, “The best footprint left in the sand by this economy that doesn’t want to be observed is the use of cash.” His studies show that, while economists talk about the advent of a cashless society, Americans still hold an enormous amount of cold, hard cash—as much as seven hundred and fifty billion dollars. The percentage of Americans who don’t use banks is surprisingly high, and on the rise. Off-the-books activity also helps explain a mystery about the current economy: even though the percentage of Americans officially working has dropped dramatically, and even though household income is still well below what it was in 2007, personal consumption is higher than it was before the recession, and retail sales have been growing briskly (despite a dip in March). Bernard Baumohl, an economist at the Economic Outlook Group, estimates that, based on historical patterns, current retail sales are actually what you’d expect if the unemployment rate were around five or six per cent, rather than the 7.6 per cent we’re stuck with. The difference, he argues, probably reflects workers migrating into the shadow economy. “It’s typical that during recessions people work on the side while collecting unemployment,” Baumohl told me. “But the severity of the recession and the profound weakness of this recovery may mean that a lot more people have entered the underground economy, and have had to stay there longer.”

The increasing importance of the gray economy isn’t only a reaction to the downturn: studies suggest that the sector has been growing steadily over the years. In 1992, the I.R.S. estimated that the government was losing $80 billion a year in income-tax revenue. Its estimate for 2006 was $385 billion—almost five times as much (and still an underestimate, according to Feige’s numbers). The U.S. is certainly a long way from, say, Greece, where tax evasion is a national sport and the shadow economy accounts for twenty-seven per cent of G.D.P. But the forces pushing people to work off the books are powerful. Feige points to the growing distrust of government as one important factor. The desire to avoid licensing regulations, which force people to jump through elaborate hoops just to get a job, is another. Most important, perhaps, are changes in the way we work. As Baumohl put it, “For businesses, the calculus of hiring has fundamentally changed.” Companies have got used to bringing people on as needed and then dropping them when the job is over, and they save on benefits and payroll taxes by treating even full-time employees as independent contractors. Casual employment often becomes under-the-table work; the arrangement has become a way of life in the construction industry. In a recent California survey of three hundred thousand contractors, two-thirds said they had no direct employees, meaning that they did not need to pay workers’-compensation insurance or payroll taxes. In other words, for lots of people off-the-books work is the only job available.

Sudhir Venkatesh, a sociologist at Columbia and the author of a study of the underground economy, thinks that many workers, particularly younger ones, have become comfortable with casual work arrangements. “We have seen the rise of a new generation of people who are much more used to doing things in a freelance way,” he said. “That makes them more amenable to unregulated work. And they seem less concerned about security, which they equate with rigidity.” The growing importance of services in the economy is also crucial. Tutors, nannies, yoga teachers, housecleaners, and the like are often paid in cash, which is hard for the I.R.S. to track. In a 2006 study, the economist Catherine Haskins found that between eighty and ninety-seven per cent of nannies were paid under the table.

Continued in article

Case Studies in Gaming the Income Tax Laws ---
http://www.cs.trinity.edu/~rjensen/temp/TaxNoTax.htm

At Long Last
The FASB Proposes Taking Some Unrealized Fair Value Changes Out of Earnings and Relegate them to OCI
From a Deloitte "Heads Up" on April 19, 2013
http://deloitte.wsj.com/cfo/2013/04/19/recognition-and-measurement-of-financial-instruments-fasb-amendments-to-proposed-asu/

. . .

Under the proposed ASU, the unconditional fair value option for financial assets and financial liabilities in ASC 825³ would be replaced with a conditional fair value option that would be available when:

—Financial assets are held and managed in a hold-and-sell business model (i.e., otherwise accounted for at fair value through other comprehensive income).

—An entity manages the net exposure for a group of financial assets and financial liabilities on a fair value basis and provides net exposure information to its management.

—A hybrid financial liability contains an embedded derivative that significantly modifies its cash flows as long as it is clear (with little or no analysis) that separation of the embedded derivative is not precluded.

However, the ED notes that for financial assets and financial liabilities outside the scope of the proposed ASU such as the following, a fair value option would no longer be available:

a. Guarantees and other contingencies accounted for in accordance with [ASC] 460, Guarantees, or contingencies accounted for under [ASC] 450, Contingencies, that will not be within the scope of the forthcoming proposed [ASU] on insurance contracts. The effective date and transition provisions to eliminate the fair value optionfor these items would be consistent with the guidance in the proposed [ASU] on financial instruments.[⁵]

b. Rights and obligations under an insurance contract and obligations under a warranty that currently are accounted for under [ASC] 944, Financial Services—Insurance, or would be accounted for in accordance with the forthcoming proposed [ASU] on insurance contracts. . . .

c. Rights under a warranty that would be accounted for in accordance with the guidance in the fourthcoming [ASU] on revenue recognition. . . .

d. Written loan commitments accounted for in accordance with the proposed [ASU] on financial instruments. . . .

e. Firm commitments that otherwise would not be recognized at inception and that involve only financial instruments. . . . The effective date and transition provisions for these items would be consistent with the guidance in the proposed [ASU] on financial instruments.[⁶]

Entities would cease using the fair value option under ASC 825 for each of these instruments in accordance with the effective date and transition method for each related project. For example, public entities would no longer be able to apply the fair value option under ASC 825 to rights under a warranty accounted for in accordance with the forthcoming final standard on revenue recognition for fiscal and interim periods that begin on or after January 1, 2017.⁷ The revenue standard will permit entities to apply the new guidance retrospectively or by using a cumulative-effect approach.⁸ The FASB has not decided what the effective dates will be for its forthcoming standard on insurance contracts or for the proposed ASU.

Editor’s Note: Replacing the unconditional fair value option with one that can be applied only in limited circumstances reduces the number of accounting choices for similar instruments and is expected to improve comparability. Improving comparability is one of the stated objectives in the proposed ASU. The ED does not propose eliminating the fair value option under ASC 860-10-35 for servicing assets and servicing liabilities.

Jensen Comment
Guess we know how intermediate textbook authors will be spending their summer breaks, especially those end-of-chapter materials and test banks.

Of course certain types of hedges (cash flow hedges and FX hedges) under FAS 133 recorded fair value changes to OCI to the extent that the hedges were effective. Fair value hedges did do not use OCI.

Soon you won't have to be hedging to get OCI relief for unrealized fair value changes in general.

Does this seem, at least in a way, how the FASB has come full circle from FAS 115?

Bob Jensen's threads on the controversies of fair value accounting ---
http://www.trinity.edu/rjensen/theory02.htm#FairValue

Question
What is the new acronym OIS in financial accounting?

The IASB and FASB hedge accounting standards are replete with references to LIBOR as an interest rate underlying. LIBOR was never a risk-free underlying, but it was assumed to come close until it was discovered that the big London banks were fraudulently manipulating LIBOR. What has since been replacing LIBOR as an underlying in derivative financial instruments contracts?

Answer
Overnight Indexed Swap (OIS) rates ---
http://en.wikipedia.org/wiki/Overnight_index_swap

Of course underlyings can still be the supposed risk-free U.S. Treasury ratea, but these are pretty steady and close to zero these days since the Federal Reserve is buying up treasury debt in its Quantitative Easing program that is tantamount to printing dollars to pay government invoices for goods and services and interest on legitimate government debt. Treasury rates will one day take an abnormal jump when and if the Fed ever comes to its senses.

New Hedge Accounting Rules for IFRS

From IAS Plus on April 25, 2013

Deloitte observers at the IASB meeting currently held in London report that the IASB has just voted on the way forward in the hedge accounting project.

The IASB decided with a majority of ten to six votes (official notification outstanding) to follow the model suggested by EFRAG in its letter dated 22 March 2013 (an option of either following the current hedge accounting requirements until the project on macro hedge accounting has been completed or of applying IFRS 9). Furthermore, the IASB decided (12 – 4) that a re-exposure will not be necessary.

More detailed information will be available soon in the IAS Plus meeting notes covering the current meeting.

Jensen Comment
If the IASB follows the FASB lead in posting most gains and losses from fair value adjustments to OCI rather than current earnings, many of the hedge accounting issues for cash flow and FX hedges will go away. Fair value hedges will remain problematic since fair value hedges do not affect OCI under current hedge accounting rules. For example, when inventory on hand is hedged for fair value, current rules call for fair value of the inventory carrying amount during the hedging period.

I've not seen where the IASB plans to follow the FASB lead in posting fair value changes to OCI rather than current earnings. It will be a great day for earnings change trackers when that happens.

Former FASB Chairman, Bob Herz, Speaks Out About Convergence, April 18, 2013
Companies and investors are weary of changes and distrust principles-based standards
http://blogs.wsj.com/cfo/2013/04/18/former-fasb-chair-nobody-said-convergence-would-be-easy/

Evaluating Investment Risk
Video from the Stanford Graduate School of Business
http://www.youtube.com/watch?v=H7zePShLC5o&ct=t%28Stanford_Business_Re_Think_Issue_Eleven4_5_2013%29
Warren Buffett will agree with part of this but certainly not all of it given his track record on beating the pants off mathematical hedging advocates like accountics scientist Charles Lee.

If you really want to understand the problem you’re apparently wanting to study, read about how Warren Buffett changed the whole outlook of a great econometrics/mathematics researcher (Janet Tavkoli). I’ve mentioned this fantastic book before --- Dear Mr. Buffett. What opened her eyes is how Warren Buffet built his vast, vast fortune exploiting the errors of the sophisticated mathematical model builders when valuing derivatives (especially options) where he became the writer of enormous option contracts (hundreds of millions of dollars per contract). Warren Buffet dared to go where mathematical models could not or would not venture when the real world became too complicated to model. Warren reads financial statements better than most anybody else in the world and has a fantastic ability to retain and process what he’s studied. It’s impossible to model his mind.

I finally grasped what Warren was saying. Warren has such a wide body of knowledge that he does not need to rely on “systems.” . . . Warren’s vast knowledge of corporations and their finances helps him identify derivatives opportunities, too. He only participates in derivatives markets when Wall Street gets it wrong and prices derivatives (with mathematical models) incorrectly. Warren tells everyone that he only does certain derivatives transactions when they are mispriced.

Wall Street derivatives traders construct trading models with no clear idea of what they are doing. I know investment bank modelers with advanced math and science degrees who have never read the financial statements of the corporate credits they model. This is true of some credit derivatives traders, too.
Janet Tavakoli, Dear Mr. Buffett, Page 19

The Wall Street Journal increased the billing rate for me to $26 per month. This is reasonable considering that this thick thing is delivered to my mailbox six days each week.

However, if I choose only the digital electronic version with no hard copy delivery, I only save $4 per month --- which is now a bummer price, especially for students.

However, there is a simple way to read very current articles in the WSJ electronically for free using Google Advanced Search using the "All the words" search box ---
http://www.google.com/advanced_search .
Instructions are given at
http://www.businessinsider.com/how-to-read-the-wsj-for-free-online-2009-6
Thank you Chris Nolan for the heads up.

Those of you who have access to your campus library electronic databases can probably access archived WSJ articles using database subscriptions paid for by your college or university.

The New York Times has a different free-access policy. I think you get something like 15 articles free per month. However, for me this seems to increase if I change Web browsers --- say from Firefox to Internet Explorer. Please don't ask me why this works or if it is totally ethical.

Academic Versus Political Reporting of Research:  Percentage Columns Versus Per Capita Columns ---
http://www.cs.trinity.edu/~rjensen/temp/TaxAirlineSeatCase.htm
by Bob Jensen, April 3, 2013

"The Happiest People Pursue the Most Difficult Problems," by Steven Berglas, Harvard Business Review Blog, April 10, 2013 ---
http://blogs.hbr.org/cs/2013/04/if_youre_confident_about_compe.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

Jensen Comment
Probably XXXXX University's top (tenured) mathematics research professor was forced by the University enter into anger management counseling as a condition to his reappointment. We had been good friends over the years, although I lost touch with him since he changed universities.

The above article does explain why some accountics scientists are so unhappy and defensive. They avoid the most difficult research problems of collecting their own data in the real world. Instead they take the easy way out by mining data in purchased databases.

This begs the question of why creativity in accounting research is a rare event in terms of original inventions in the halls of our Academy ---
http://www.cs.trinity.edu/~rjensen/temp/AccounticsDamn.htm#Inventors

Why genius lies in the selection of what is worth observing.
"The Art of Observation and How to Master the Crucial Difference Between Observation and Intuition," by Maria Popova, Brain Pickings, March 29, 2013
http://www.brainpickings.org/index.php/2013/03/29/the-art-of-observation/
This selection has a number of historic photographs of well-known scientists --- all women!

“In the field of observation,” legendary disease prevention pioneer Louis Pasteur famously proclaimed in 1854, “chance favors only the prepared mind.” “Knowledge comes form noticing resemblances and recurrences in the events that happen around us,” neuroscience godfather Wilfred Trotter asserted. That keen observation is what transmutes information into knowledge is indisputable — look no further than Sherlock Holmes and his exquisite mindfulness for a proof — but how, exactly, does one cultivate that critical faculty?

From The Art of Scientific Investigation (public library; public domain) by Cambridge University animal pathology professor W. I. B. Beveridge — the same fantastic 1957 compendium that explored the role of the intuition and imagination in science and how serendipity and “chance opportunism” fuel discovery — comes a timeless meditation on the art of observation, which he insists “is not passively watching but is an active mental process,” and the importance of distinguishing it from what we call intuition.

Though a number of celebrated minds favored intuition over rationality, and even Beveridge himself extolled the merits of the intuitive in science, he sides with modern-day admonitions about our tendency to mislabel other cognitive processes as “intuition” and advises:

It is important to realize that observation is much more than merely seeing something; it also involves a mental process. In all observations there are two elements : (a) the sense-perceptual element (usually visual) and (b) the mental, which, as we have seen, may be partly conscious and partly unconscious. Where the sense-perceptual element is relatively unimportant, it is often difficult to distinguish between an observation and an ordinary intuition. For example, this sort of thing is usually referred to as an observation: “I have noticed that I get hay fever whenever I go near horses.” The hay fever and the horses are perfectly obvious, it is the connection between the two that may require astuteness to notice at first, and this is a mental process not distinguishable from an intuition. Sometimes it is possible to draw a line between the noticing and the intuition, e.g. Aristotle commented that on observing that the bright side of the moon is always toward the sun, it may suddenly occur to the observer that the explanation is that the moon shines by the light of the sun.

For the practical applications of observation, Beveridge turns to French physiologist Claude Bernard’s model, pointing out the connection-making necessary for creativity:

Claude Bernard distinguished two types of observation: (a) spontaneous or passive observations which are unexpected; and (b) induced or active observations which are deliberately sought, usually on account of an hypothesis. … Effective spontaneous observation involves firstly noticing some object or event. The thing noticed will only become significant if the mind of the observer either consciously or unconsciously relates it to some relevant knowledge or past experience, or if in pondering on it subsequently he arrives at some hypothesis. In the last section attention was called to the fact that the mind is particularly sensitive to changes or differences. This is of use in scientific observation, but what is more important and more difficult is to observe (in this instance mainly a mental process) resemblances or correlations between things that on the surface appeared quite unrelated.

Echoing Jean Jacques Rousseau’s timeless words that “real wisdom is not the knowledge of everything, but the knowledge of which things in life are necessary, which are less necessary, and which are completely unnecessary to know” and Noam Chomsky’s similar assertion centuries later, Beveridge cautions:

One cannot observe everything closely, therefore one must discriminate and try to select the significant. When practicing a branch of science, the ‘trained’ observer deliberately looks for specific things which his training has taught him are significant, but in research he often has to rely on his own discrimination, guided only by his general scientific knowledge, judgment and perhaps an hypothesis which he entertains.

Continued in article

Jensen Comment
This begs the question of why creativity in accounting research is a rare event in terms of original inventions in the halls of our Academy ---
http://www.cs.trinity.edu/~rjensen/temp/AccounticsDamn.htm#Inventors

This is especially discouraging over the past five decades as accounting research in our Academy became dominated by accountics scientists ---
http://www.trinity.edu/rjensen/395wpTAR/Web/TAR395wp.htm

We close with a quotation from Scott McLemee demonstrating that what happened among accountancy academics over the past four decades is not unlike what happened in other academic disciplines that developed “internal dynamics of esoteric disciplines,” communicating among themselves in loops detached from their underlying professions. McLemee’s [2006] article stems from Bender [1993].

 “Knowledge and competence increasingly developed out of the internal dynamics of esoteric disciplines rather than within the context of shared perceptions of public needs,” writes Bender. “This is not to say that professionalized disciplines or the modern service professions that imitated them became socially irresponsible. But their contributions to society began to flow from their own self-definitions rather than from a reciprocal engagement with general public discourse.”

 

Now, there is a definite note of sadness in Bender’s narrative – as there always tends to be in accounts of the shift from Gemeinschaft to Gesellschaft. Yet it is also clear that the transformation from civic to disciplinary professionalism was necessary.

 

“The new disciplines offered relatively precise subject matter and procedures,” Bender concedes, “at a time when both were greatly confused. The new professionalism also promised guarantees of competence — certification — in an era when criteria of intellectual authority were vague and professional performance was unreliable.”

But in the epilogue to Intellect and Public Life, Bender suggests that the process eventually went too far. “The risk now is precisely the opposite,” he writes. “Academe is threatened by the twin dangers of fossilization and scholasticism (of three types: tedium, high tech, and radical chic). The agenda for the next decade, at least as I see it, ought to be the opening up of the disciplines, the ventilating of professional communities that have come to share too much and that have become too self-referential.”

Joe Hoyle has a question for you?

"I HAVE A QUESTION FOR YOU," by Joe Hoyle, Teaching Blog, April 27, 2013 ---
http://joehoyle-teaching.blogspot.com/2013/04/i-have-question-for-you.html

Jensen Comment
I would never ask such a question about the entries in my three blogs, because faithful followers would have to sift through over 50,000 postings in my three blogs that are also posted in various places in my massive Website. Joe has only 166 postings to sift through which is a much more manageable task. But sifting through my postings for likes and dislikes is out of the question even for me ---
http://www.trinity.edu/rjensen/threads.htm
This is not to imply that my stuff has been better or worse than that of my good friend Joe. It's simply a fact that I'm a more active blogger and Web site manager.

I also have over 31,000 postings to the AECM and nearly 18,000 postings and comments on the AAA Commons. Obviously searching for "favorites" is out of the question. My postings have covered the waterfront for education technology to learning theory to nearly all accounting topics.

I do have some early-on postings that I'm very proud of in the early stages of my blog. I was one of the early writers who tried to dispel the myth that online courses needed to be less interactive and intense with individual students. When done "optimally" the communications between a student and an instructor and other students in an online course are more intense than any onsite course. Of course, online courses are not always conducted with such intensity just as onsite courses vary to a tremendous extent in terms of interactions of students and instructors.

But when it comes down to identify the real game changers arising from my postings I can hardly take credit for most of the game changers since in most of my postings I'm mostly referencing and quoting articles. I have to give others most of the credit for seminal ideas. In most ways I'm more of a scout for new inventions than an inventor. I like to think I've been a pretty good scout.

What I enjoy most are the debates with such writers as Tom Selling, Stever Kachelmeier, Richard Sansing, Paul Williams, Patricia Walters, and many, many others. I've learned immensely from these scholars and hope I returned something of value to them.

Although I'm a bit more active as a blogger after my retirement from teaching in 2006, I want to stress that I was nearly as active since the late 1980s when commenced to blog more and more and then more and more. My point is that bloggers need not be retired just to make blogging contributions just like Joe Hoyle is not yet retired and makes many valuable contributions to our craft.

Reply from Joe Hoyle on April 28, 2013

I bet you'd be surprised -- if you simply asked the question "what have I ever said that you immediately remember," you'd get a lot of interesting comments. People's memory serves as a pretty good filter. Almost invariably when people write to me, they start off with "you once said the following and it has stuck with me." And, it is often something that wasn't all that important to me. But it clearly meant something to them. I find that interesting with my students also -- years after they graduate, they will tell me something that I said to them that impacted their life and I won't even remember having said it.

That's one of the things that makes this teaching job so interesting.

Joe

April 29, 2013 reply from Bob Jensen

Hi Joe,

Our styles tend to be different and are probably not comparable. Your blog is more like a personal diary that discusses your own feelings and beliefs and philosophy.

My postings are full of commentaries on what other scholars and researchers have written. My style is more like a journal referee commenting on an article at hand --- pointing out the good and the bad aspects of the article.

You also focus mostly on your personal teaching experiences. I cover more of the ball park --- fraud updates, audit professionalism, communications from standard setters, education technology (bright and dark sides), tools and tricks of the trade, learning theory, accounting theory, and on and on and on.

I think we both provide a service to our professions Joe. We just have different styles and scope of coverage.

Keep up the good work Joe. I still wish you would join the AECM even as a lurker.

Keep up the good work Joe,

Bob Jensen

By the way, my answer to Joe Hoyle's question about his posting that I like best is
"How You Test Is How They Will Learn," by Joe Hoyle, Teaching Blog, January 31, 2010 --- http://joehoyle-teaching.blogspot.com/2010/01/how-you-test-is-how-they-will-learn.html 
 

An example of a Website helper page that I take pride in is at
http://www.trinity.edu/rjensen/000aaa/thetools.htm

Bob Jensen's links to similar Website helper pages ---
http://www.trinity.edu/rjensen/threads.htm

My Outstanding Educator Award Speech ---
http://www.trinity.edu/rjensen/000aaa/AAAaward_files/AAAaward02.htm

"WHAT MAKES GREAT TEACHERS GREAT?" by Joe Hoyle, Teaching Blog, April 16, 2013 ---
http://joehoyle-teaching.blogspot.com/2013/04/what-makes-great-teachers-great.html

. . .

Great teachers seem to possess most of the following qualities:

(1) Love of Their Subject. They love what they teach. That love is obvious and contagious, often rubbing off on students. Many of their students say, for example, “I really didn’t like history until I took his class. Now I love it.”

(2) Vibrant. They are enthusiastic and energetic. Their classes are vibrant and lively, usually punctuated with regular give-and-take with students. Here the teaching process is a two-way street.

(3) Up-to-date. Great teachers have complete command of their subject based on current scholarship, and they know how to present it in organized and understandable ways. There are no yellowed or dog- eared lecture notes in their classes. If they teach in technical fields, they stay up-to-date with constantly changing technology.

(4) Creative. They are creative and help students look at things from different perspectives. They challenge assumptions and help students learn how to think analytically and critically, and to see things in a different light. Virginia’s Standard of Learning testing requirements stifle creative teaching in public schools, according to many critics. A former high school principal, however, told me that the great teachers he knows have adapted to the SOLs and still do a superb job in the classroom.

(5) Demanding. Great teachers usually are not easy teachers. They keep their students on their toes and do not pander to them. Yet they attempt to bring out the best in their students without badgering or humiliating them.

(6) Relevancy. They have the ability to make their subject relevant so that students can see a connection to their own lives and the world around them.

(7) Trust. Their credibility is unquestioned, and they are trusted by their students, who sense that the teacher is honest, forthright and fair.

Continued in article

Jensen Comment
I find that the above criteria can be repackaged in various ways. For example, the KPMG Foundation has been striving now for over 25 years to provide significant financial support to minorities in accounting doctoral programs and has been doing a great job in a selected subset of accounting doctoral programs. One of the main purpose is to provide minority role models.

I don't know quite how to define a great role model for teachers because there are so many different types of great role models. Great role models all seem to have a passion for teaching and sufficient expertise for the levels of their courses.

What needs to be expanded by Joe is the fact that the "great teachers" are not always a very popular teachers. Conversely, the "most popular" teachers are not necessarily great teachers. Some teachers appear to be popular just because they are almost certain to raise a student's grade point average. Sometimes they've popular because they cover so little material and skip over the hard stuff. Students love being entertained by humor, learning games such as Monopoly or Jeopardy, etc.

Students like to be spoon fed and often give teachers high ratings simply because these teachers make the textbook seem easy. A great teacher may instead make the textbook seem superficial or lacking in modules that great teachers think are vital to the course. Or a great teacher may critically evaluate a textbook module to provide students with illustrations of critical thinking.

Somewhat neglected here is education versus teaching.
It is possible to be a great educator without necessarily being a great teacher. These days I like to think of myself as an educator even though I no longer teach. There are various ways of being a great educator. One way is by making very current learning materials available and making them easy to find --- such as on a Website. I would like to give more credit to professors have tremendous open access Websites. I don't find many terrific Websites among accounting educators and researchers.

Some educators are great because they provide the world with outstanding textbooks, including those great end-of-chapter materials. In many instances textbook writers are highly rewarded financially, but certainly not in all cases --- especially in small market specialties.

Some great educators lead great teachers and help to bring the resources that make programs great.

Some great educators challenge great teachers, great researchers, and other educators. For example, some bloggers do a terrific job challenging recent research journal articles and published teaching cases.

I think sometimes great educators inspire critical thinking even though they themselves may not be considered great teachers under the criteria listed by Joe in the above article.

Such educators are seldom happy with materials great teachers think are tremendous.

Teacher to Teacher: Critical Thinking in the College Classroom ---
http://www.utexas.edu/academic/ctl/criticalthinking/accessible.php?section=1

Why Critical Thinking is so Hard to Teach ---
http://www.trinity.edu/rjensen/000aaa/thetools.htm#CriticalThinking

April 16, 2013 reply from Joe Hoyle

Hi Bob --
I have no idea why the blog won't accept your comments. And, I'm disappointed because I'd love to have your thoughts. They would add to the site. I'm actually not very blog savvy and on these free sites there are no live human beings to ask questions of. I seem to remember when I first started that I had to have a Google account in order to register comments. I had a gmail email address and so that password worked but that is only a vague recollection. I'm a person who very much operates on a "need to know" basis.

I enjoyed your comments below. I think we need more opinions out there on education. I'm also troubled that it is so difficult to identify who "great teachers" really are. I can't remember if I have ever written this on the blog but I often say it when I give live presentations: student evaluations are one of the worst things to ever happen to college education. And that is because, as you say, "great teacher" and favorite teacher have become "intertwined concepts."

How do you determine greatness in teachers? Any way that i can come up with another person could easily take apart. I have one pet method. I don't know if you ever look at Rate My Professor.com. Okay, for the most part it is a bunch of baloney. However, my theory is that the best teachers are the ones who have the largest spread between "quality" and "easiness." A 5 and a 5 is an extremely easy teacher who is popular and funny and a 1 and a 1 is a tough teacher who isn't very clear. But a 5 and a 1 is doing something right - high quality and extreme toughness. Now, I will warn you that I probably like that one measure because I do well on it. Soooo, are we just drawn to evaluation techniques that put us in the best possible light? That might be the one thing that is really true.

I suspect that the best way to evaluate great teaching is to give students some type of course evaluation 3 years after they graduate. They have a better perspective. But again, I'm sure someone else can tell me why that is complete nonsense.

Thanks for congratulations on the innovation award. You know the best part of that. They give me a 75 minute slot to talk to people. Of course, as you might guess, it is on Wednesday at 2:00 when most people have left or headed to Disney Land but that will still give me a chance to meet some new people and make some new teaching friends. The only real way to get better as a teacher is to have some thoughtful conversations and I can always use more friends to talk with.

Keep up the good work. We need more folks like you. Hope to see you in August -- grab me and we'll have a drink together and figure out what great teaching really means.

Joe

April 17, 2013 reply from Bob Jensen

Hi Joe,

I probably go to RateMyProfessor.com more than any other accounting professor --- mostly out of curiosity but sometimes with purpose. I'm often seeking evidence about teachers who try to indoctrinate more than they educate:

"Noam Chomsky Spells Out the Purpose of Education," by Josh Jones, Open Culture, November 2012 --- http://www.openculture.com/2012/11/noam_chomsky_spells_out_the_purpose_of_education.html 

I never even look at the numerical scores on RMP because the sample respondents are self selecting.

I find the subjective comments sometimes revealing about such things as easiness, course requirements, mood swings, and bias.

I have great difficulty distinguishing between popularity versus teaching greatness. Sometimes students praise things that do not make great teaching in my opinion. Sometimes they criticize things that do not detract from teaching greatness in my opinion.

When I was a department chair I had an intermediate teacher who was not at all great in the classroom. But she spent 6-8 hours each day helping students in her office. In this she excelled. So I consider her a great teacher having passion, dedication, and respect from her students concerning what they learned.

But 6-8 hours in the office does not make all teachers great. In some cases students may grow angry over having to spend so much time outside the classroom when great teachers would make better use of class time.

I'm actually a great fan of the BAM pedagogy that most students hate. Students probably learn the most while hating their teachers the most --- http://www.trinity.edu/rjensen/265wp.htm

I think the BAM teachers who can pull this off are probably the greatest teachers and the most hated teachers in higher education --- keeping in mind that students probably only have time for one BAM course per term.

There's no magic formula for teaching greatness and no single role model.

In any case keep up the good work Joe.

My one wish from you is that you would become more active on the AECM. There is so much you could add to our debates.

Respectfully,
Bob Jensen

Does anybody out there have feedback regarding this in-home tutoring service (includes accounting with pictures of the tutors)?

If I were to seek out tutoring I would first look at the many free tutorials on almost any topic (including advanced topics like hedge accounting) on YouTube. These vary in quality and do not push to learn like in-home tutors can possibly push to learn.

It's a little like learning to play the piano. Sure there are tutorials on YouTube for learning how to play the piano. However, an in-home piano teacher may be more effective and more expensive.

VarsityTutors
Private In-Home Tutoring

April 15, 2013 message from Jennifer Thomas

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Question
Do accounting professors know more about inflation index calculations than the voting public?

First note that in order to be deceptive the government took food and fuel out of the inflation index so that price changes for retired people that buy food and fuel are deceived by why their so-called Social Security adjustments are much less than if food and fuel price changes were factored into their inflation adjustments.

Here we go again with another round of deception.

 "The Obama Price Index ," The Wall Street Journal, April 10, 2013 ---
http://online.wsj.com/article/SB10001424127887324695104578414891693238684.html?mod=djemEditorialPage_h 

President Obama is said to be trying to lure Republicans into another grand bargain by including a proposal in his 2014 budget that would slightly slow the growth of Social Security and other federal benefits. But he's also telling the Democrats going bonkers about slashing Social Security not to worry, the cuts aren't drastic and barely noticeable.

It's the Schrödinger's cat of entitlement reform. Both his political postures can't be true at once, and no points awarded for guessing what the details reveal.

Mr. Obama is proposing that Congress replace the conventional consumer price index with a more accurate measure of inflation known as "chain-weighted CPI," or chain CPI. This alternative measure of purchasing power takes into account how consumers change their buying habits over time as prices change. When oranges cost more, for example, people buy fewer oranges and eat more apples instead.

If such "substitution effects" don't sound like much of a concession to Republicans or much for Democrats to get mad about, well, chain CPI is one of those Beltway specials—a proposal everyone can support because it gouges both sides.

Over the last decade or so, chain CPI has grown about a quarter of a percentage point slower than the normal index. Plugging the new measure into the Social Security formula means that the program's cost of living adjustments wouldn't increase as fast. The same applies to other federal assistance programs like food stamps, federal pensions and refundable tax credits. In total, chain CPI would reduce federal spending by $216 billion over 10 years, according to the Congressional Budget Office. Chain CPI would also raise $123 billion in new revenue, because the annual income amounts for the tax brackets would rise more slowly as well.

Chain CPI is a useful technocratic correction. The Social Security formula wasn't written with a finger of light on stone tablets, and in any case who's in favor of inaccurately measuring inflation?

Well, it seems Mr. Obama is. It turns out that his budget doesn't accept chain CPI for everyone. Instead it modifies the modification of inflation with (still undefined) "protections for the very elderly and others who rely on Social Security for long periods of time, and only applies the change to non-means-tested benefit programs." His version reduces the deficit $230 billion—$100 billion of it tax increases—not CBO's $339 billion.

So Mr. Obama's olive branch would accurately measure inflation for some people, but then continue to inaccurately measure inflation for the people he thinks are more deserving of larger government transfers. These exceptions are meant to placate the liberals who want to expand Social Security, but means-testing chain CPI defeats the alleged purpose of the change. Why not just go all the way and invent a new measure called Obama CPI?

Governmental accounting in general is all done with smoke and mirrors ---
http://www.trinity.edu/rjensen/Theory02.htm#GovernmentalAccounting

Credit Default Swaps (CDS) --- http://en.wikipedia.org/wiki/Credit_default_swap

"Global Financial Stability Report:  Old Risks, New Challenges"
International Monetary Fund
April 2013
http://www.docstoc.com/docs/154106200/IMF Report

The Global Financial Stability Report (GFSR) assesses key risks facing the global financial system. In normal times, the report seeks to play a role in preventing crises by highlighting policies that may mitigate systemic risks, thereby contributing to global financial stability and the sustained economic growth of the IMF’s member countries. Risks to financial stability have declined since the October 2012 GFSR, providing support to the economy and prompting a rally in risk assets. These favorable conditions reflect a combination of deeper policy commitments, renewed monetary stimulus, and continued liquidity support. The current report analyzes the key challenges facing financial and nonfinancial firms as they continue to repair their balance sheets and unwind debt overhangs. The report also takes a closer look at the sovereign credit default swaps market to determine its usefulness and its susceptibility to speculative excesses. Lastly, the report examines the issue of unconventional monetary policy (“MP-plus”) and its potential side effects, and suggests the use of macroprudential policies, as needed, to lessen vulnerabilities, allowing country authorities to continue using MP-plus to support growth while protecting financial stability.

The analysis in this report has been coordinated by the Monetary and Capital Markets (MCM) Department under the general direction of José Viñals, Financial Counsellor and Director. The project has been directed by Jan Brockmeijer and Robert Sheehy, both Deputy Directors; Peter Dattels and Laura Kodres, Assistant Directors; and Matthew Jones, Advisor. It has benefited from comments and suggestions from the senior staff in the MCM department.

Individual contributors to the report are: Ali Al-Eyd, Sergei Antoshin, Serkan Arslanalp, Craig Botham, Jorge A. Chan-Lau, Yingyuan Chen, Ken Chikada, Julian Chow, Nehad Chowdhury, Sean Craig, Reinout De Bock, Jennifer Elliott, Michaela Erbenova, Jeanne Gobat, Brenda González-Hermosillo, Dale Gray, Sanjay Hazarika, Heiko Hesse, Changchun Hua, Anna Ilyina, Tommaso Mancini-Griffoli, S. Erik Oppers, Bradley Jones, Marcel Kasumovich, William Kerry, John Kiff, Frederic Lambert, Rebecca McCaughrin, Peter Lindner, André Meier, Paul Mills, Nada Oulidi, Hiroko Oura, Evan Papageorgiou, Vladimir Pillonca, Jaume Puig, Jochen Schmittmann, Miguel Segoviano, Jongsoon Shin, Stephen Smith, Nobuyasu Sugimoto, Narayan Suryakumar, Takahiro Tsuda, Kenichi Ueda, Nico Valckx, and Chris Walker. Martin Edmonds, Mustafa Jamal, Oksana Khadarina, and Yoon Sook Kim provided analytical support. Gerald Gloria, Nirmaleen Jayawardane, Juan Rigat, Adriana Rota, and Ramanjeet Singh were responsible for word processing. Eugenio Cerutti, Ali Sharifkhani, and Hui Tong provided database and programming support. Joanne Johnson and Gregg Forte of the External Relations Department edited the manuscript and the External Relations Department coordinated production of the publication.

This particular issue draws, in part, on a series of discussions with banks, clearing organizations, securities firms, asset management companies, hedge funds, standards setters, financial consultants, pension funds, central banks, national treasuries, and academic researchers. The report reflects information available up to April 2, 2013.

The report benefited from comments and suggestions from staff in other IMF departments, as well as from Executive Directors following their discussion of the Global Financial Stability Report on April 1, 2013. However, the analysis and policy considerations are those of the contributing staff and should not be attributed to the Executive Directors, their national authorities, or the IMF.

Jensen Comment
Note that much of this report deals with the state of Credit Default Swaps.

Bob Jensen’s threads on the CDO and CDS scandals ---
http://www.trinity.edu/rjensen/2008Bailout.htm#Sleaze

Teaching Case from The Wall Street Journal Accounting Weekly Review on April 5, 2013

Tesla Sees First-Ever Quarterly Profit
by: Mike Ramsey and Tess Stynes
Apr 02, 2013
Click here to view the full article on WSJ.com
 

TOPICS: Corporate Taxes, Earnings Forecasts, Revenue Forecast, Revenue Recognition

SUMMARY: "Tesla Motors Inc. said it would report a first-quarter profit, sending the luxury electric-car maker's shares surging 16% on Monday." The article notes that the company recognizes revenue when cars are delivered--no surprise there but the company takes a $5,000 for each car ordered that becomes nonrefundable as soon as the customer selects specifications. The company also earns a significant portion of its revenues from sales of pollution control tax credits issued by the state of California and by the U.S. Federal government.

CLASSROOM APPLICATION: Questions lead students to the Form 8-K filing specifically discussing management guidance about soon-to-be released earnings and to the 2012 Form 10-K for revenue recognition policies.

QUESTIONS: 
1. (Introductory) What product does Tesla Motors manufacture? Identify your source for information about the company.

2. (Introductory) What milestone did Tesla Motors reach during the first quarter of 2013? How did the market react to this news? Do you think this is likely to be an overreaction? Explain your answer.

3. (Advanced) When does Tesla record revenue from its sales of automobiles? Why do you think this accounting policy is mentioned--is there anything unusual about the timing of recognition? To help answer this question, you may access the Tesla Motors annual report for 2012 filed on Form 10-K and available on the SEC web site at http://www.sec.gov/cgi-bin/viewer?action=view&cik=1318605&accession_number=0001193125-13-096241&xbrl_type=v# Click on Notes to Financial Statements and then Reservation Payments on the left hand side of the page.

4. (Advanced) Access the company's Filing on Form 8-K--dated March 30, 2013, and filed on April 1, 2013--on which this article is based, available on the SEC's web site at http://www.sec.gov/Archives/edgar/data/1318605/000119312513135229/d514482dex991.htm What is the basis for the improved financial performance to be reported for the upcoming quarter?

5. (Advanced) The 8-K filing contains the words, "as a result, Tesla is amending its Q1 guidance to full profitability, both GAAP and non-GAAP." What is management guidance? What are GAAP earnings versus non-GAAP earnings?

6. (Introductory) Why do you think that management reported this guidance as soon as the number of vehicles sold indicated that the company would do better than break-even? Why not just wait until the quarterly report for the 3 months ended March 31, 2013, is reported very soon?

7. (Advanced) What are pollution tax credits? What is the significance of this portion of the company's operations? Hint: to understand the company's earning and sale of California state and U.S. Federal pollution control credits, return to the Form 10-K and review the Summary of Significant Accounting Policies related to revenue recognition.
 

Reviewed By: Judy Beckman, University of Rhode Island

"Tesla Sees First-Ever Quarterly Profit," by: Mike Ramsey and Tess Stynes, The Wall Street Journal, April 2, 2013 ---
http://online.wsj.com/article/SB10001424127887323611604578396313231119032.html

Tesla Motors Inc. TSLA -0.90% said it would report a first-quarter profit, sending the luxury electric-car maker's shares surging 16% on Monday.

The Palo Alto, Calif., maker of $70,000 vehicles lifted its forecast for the quarter after delivering more Model S electric vehicles than it previously forecast. Tesla has a backlog of 15,000 orders and books revenue for the vehicles as soon as they are shipped to customers.

The company, which has reported a loss every quarter since it went public in 2010, said its Model S deliveries reached more than 4,750 vehicles in the first quarter, compared with Tesla's February outlook for 4,500 cars.

In 4 p.m. Nasdaq Stock Market NDAQ +0.47% trading, Tesla shares finished up $6.04 at $43.93. Corporate Intelligence

Tesla Says It Will Turn a Profit, No Fooling

Analysts polled by Thomson Reuters had projected a first-quarter loss of seven cents a share for Tesla.

The disclosure, made late Sunday, came a few days after Chief Executive Officer Elon Musk had used Twitter to foreshadow news coming from the Silicon Valley car maker.

"I am incredibly proud of the Tesla team for their outstanding work. There have been many car startups over the past several decades, but profitability is what makes a company real. Tesla is here to stay and keep fighting for the electric car revolution," Mr. Musk said in a statement.

A Tesla representative said the profit forecast wasn't the big announcement that Mr. Musk alluded to, and later added the company would make an announcement on Tuesday.

In a message posted last week on Twitter, Mr. Musk said a "really exciting" bit of news was to come and that he was going to "put my money where my mouth is in v[ery] major way." He later said he had to delay the announcement so as not to create any end-of-quarter distractions.

The profit forecast for Tesla comes at a critical time as investors had been waiting to see if the company could ever move beyond the startup stage in an industry where even long-established giants have struggled to compete.

Tesla also said it would no longer offer the 40-kilowatt-hour battery pack with the Model S. That option, which allowed buyers to buy a car that cost around $60,000, is being discontinued because of lack of demand. The smaller battery pack offered an estimated range of 160 miles, compared with 230 miles for the 60 kWh version.

The 60 kWh Model S, the next largest battery size, starts at just under $70,000. Buyers may be eligible for a $7,500 federal tax credit for a vehicle's purchase.

Tesla said it would give customers who ordered the smaller pack a 60 kWh model, but limit its range electronically, unless they choose to pay for the upgrade.

Tesla last month said in regulatory filings that it shortened its $465 million loan term by nearly five years.

Last year, the company booked $40.5 million for selling pollution tax credits to other auto makers, an amount that equaled almost 10% of its total annual revenue. Higher sales this year would generate more credits and could be a significant source of earnings.

Continued in article

Also see the take on this topic in MIT's Technology Review
"Why Tesla Survived and Fisker Won’t," by Kevin Bullis, MIT's Technology Review, April 4, 2013 ---
http://www.technologyreview.com/news/513151/why-tesla-survived-and-fisker-wont/

 Jensen Comment
Two things that really bug me about virtually all articles about electric cars.

1. The articles never discuss the cost to the car owner and the costs to society for recharging the batteries. A considerable amount of electricity is required to recharge the Tesla and Fisker cars. But the articles never investigate those costs.
   
    
2. The Teslas and Fisker electric cars are probably the worst decisions in terms of cost per mile after the luxury-car purchase prices and recharging power bills are spread over the miles driven.

It's important the companies like Tesla are continuing to conduct R&D, but don't expect the buyers of such cars in the near future to be buying them because of what they save relative to conventional cars.

The Japanese are getting out of all-electric cars until they make more sense to the general public. Much of their hopes ride on fuel cell discoveries of the future --- especially hydrogen fuel cells.

"7 states where residents don't pay income tax," NBC News, March 31, 2013 ---
http://www.nbcnews.com/business/7-states-where-residents-dont-pay-income-tax-1C9085090?ocid=twitter

Jensen Comment
New Hampshire is not on the list even though it does not tax wages, salaries, retirement incomes, tips, etc. But it has a somewhat nuisance "Interest and Dividends Tax" beyond an exemption threshold that, if I'm not mistaken, is $5,000. It does not tax such items that are buried in retirement income. I let Turbo Tax compute the amount I owe without paying too much attention to details.

 But New Hampshire more significantly has no sales tax such that residents of states like Texas, Florida, Nevada, South Dakota, Washington, and Wyoming with sales taxes may not come out as far ahead as they think relative to New Hampshire.

The above article has some interesting details that are worth noting. For example, tax collections and spending per capita are listed for the seven states featured in the article.

What states have no individual or corporate income taxes?
Hint:  Antelope run free even if they own corporations.

April 3, 2013 message from Neal Hannon

There is a wealth of accounting hidden just below the surface in XBRL.  In my latest article published today on the Hitachi blog http://bit.ly/10yJMLf  I explore how to use free XBRL online software tools to find answers to today's financial accounting questions.  Zane's ASKaRef tool is briefly reviewed in the article.  I also feature FASB's Louis Matherne talking about implementation guides. Enjoy!

"Say It With Me: Correlation ≠ Causation," by Invictus, Ritholtz Blog, March 31, 2013 ---
http://www.ritholtz.com/blog/2013/03/say-it-with-me-correlation-%E2%89%A0-causation/

Jensen Comment
In his liberal zeal Barry Ritholtz commits the same misleading cherry picking analysis while pointing a finger at  conservatives. For example, when it comes to blaming climate instead of state income taxes for flows of businesses to blue states from red states Barry selectively cherry picks "climate" data in his table. Granted that his "cold" red-state places the average temperatures are really lower in Cleveland, Detroit, Buffalo, Providence, and Rochester.

But why did Barry selectively leave out average temperatures in most cities in California where some city migrations to blue state cities have been as much or more than from the five red-state cities above?  California is complicated, however, because it is one of the more conservative states in terms of worker unemployment compensation taxes and benefits.

Why did he not analyze why Indiana is stealing jobs from Illinois or why high-tax Illinois is heavily subsidizing large employers like Caterpillar and Sears to stay in Illinois?

Obviously correlation is not causation, but don't suggest this too loudly to referees of The Accounting Review ---
An enormous problem with accountics science, and finance in general,  is that these sciences largely confine themselves to databases where it's only possible to establish correlations and not causes, because zero causal information is contained in the big databases they purchase rather than collect themselves ---
http://www.cs.trinity.edu/~rjensen/temp/AccounticsGranulationCurrentDraft.pdf 

A factor to consider is quality of the work force apart from climate and income taxes. For example, Boston is a city that has not suffered nearly as badly as most other red-state cities losing jobs to blue-state cities. One reason is the historic highest quality universities and technical schools in the Boston metropolitan area. High tech firms seek out Boston in great measure because there are skilled workers not available in many of the blue-state cities.

The fact is that business migration is caused by a number of interactive factors including tax incentives and climate but not limited to such factors. High tax states in cold climates offset such barriers with subsidies (tax credits, free land, zero-interest lending, etc.).

Also not mentioned by Barry is the one-ton gorilla of union activism, especially in red-states. If Wisconsin, Maine, Massachusetts, Michigan, and Illinois dropped state income taxes they still might not steal a whopping number jobs from Texas apart from climate and tax considerations. This purportedly why militant unions are loosing some, certainly not all, their political clout in states like Wisconsin and Michigan.

Derek Jeter --- http://en.wikipedia.org/wiki/Derek_Jeter

Derek Jeter establishes Florida residency to avoid N.Y. taxes --- Click Here
http://www.smartbrief.com/news/cpa/storyDetails.jsp?issueid=4C242192-DF4A-4AC8-A117-83A8E669BF92&copyid=7130F57E-86D4-4407-89A2-DD8BABDD1CD5&sid=a2a2cb80-d593-4abd-a32d-06da951fad0a&brief=cpa

"Five Really Dumb Money Moves You've Got to Avoid (Jensen does not agree)," by Brett Arends, The Wall Street Journal, March 31, 2013 ---
http://online.wsj.com/article/SB10001424127887324789504578384610026843812.html

1. Reaching for yield
2. Going into the poor house to send Junior to a country-club college
3. Owning stock in your employer
4. Taking Social Security too early
5. Buying long-term bonds

You know the smartest things to do with your money. But what are the worst moves? What should you avoid?

Weirdly enough, they are things that a surprising number of people are still doing—even though they probably know, in their heart of hearts, how foolish they really are.

Any list is going to be incomplete. But here are five to avoid.

1. Reaching for yield

What this country needs is a good 5% certificate of deposit. Instead the collapse in interest rates, and the Federal Reserve's policy of keeping them down for as long as possible, is driving people crazy—especially people who need to generate income from their investments.

In these circumstances, people start to do really foolish things in the desperate hunt for higher interest rates. That includes taking on crazy amounts of risk, or investing in complex products they don't understand, in the hope of higher yields. The Fed is producing a bull market in scams, Ponzi schemes and associated rackets.

The Securities and Exchange Commission recently warned about an epidemic of bogus high-yield "corporate promissory notes" being marketed to investors by scam artists.

The Wall Street Journal's Jason Zweig highlighted the woes of those sold complex "reverse convertibles," a legal but complicated product with embedded risks. Eric Lewis, chief investment officer of Bedrock Capital Management in Los Altos, Calif., suggests that if you can't explain an investment to a friend, including what might go wrong, you should think twice.

A high-yield bond fund such as the iShares High Yield Corporate Bond exchange-traded fund (HYG), which lends money to risky companies, sports a yield of about 5%. That's the maximum yield you can earn without taking on much more risk.

2. Going into the poor house to send Junior to a country-club college

Over the past 40 years, the cost of tuition and fees at a private university has tripled—after accounting for inflation. The cost of a public university has quadrupled.

The cost of getting a bachelor's degree has become a scandal in this country. Students spend $160,000 on a four-year degree and the results are too often questionable.

Financial planners strongly advise parents against plundering their own retirement savings, which they are likely to need, to pay for this.

Admittedly, a degree has become a protection racket—you can't get a job without one, but there are fewer jobs for those with them. But the smart move for the budget-constrained is to get a bachelor's degree at a public university. The tuition and fees average less than $9,000 a year instead of $30,000 at a private college.

3. Owning stock in your employer

This is one of the silliest and riskiest moves any investor can make. If the company hits trouble, you get whacked twice. You can lose your job and your savings—all in one fell swoop. Ask anyone who worked for Enron…or Lehman Brothers.

The law, amazingly, actually encourages this crazy move. While employers' 401(k) plans are subject to punitive regulations, lest they allow you to take on too much "risk," employers are allowed to offer their own stock among the investment options. Many do.

The Employee Benefit Research Institute says that the percentage of 401(k) assets held in employers' stock has been halved since 2000, but the numbers are still alarming. Furthermore, it's the youngest workers—those best able to take a gamble—who are shunning their employers' company stock.

At companies where the 401(k) plan offers the option, workers aged 40 or over typically hold about 20% of their entire 401(k) account in the company's stock, according to EBRI data. Crazy.

4. Taking Social Security too early

If you can afford to delay taking your Social Security retirement benefit, do.

Someone earning $50,000 a year who starts claiming Social Security as soon as he or she is able, age 62, will typically collect a monthly check of about $1,000, according to the Social Security Administration. If they wait until they are 70, that amount would double.

Taking Social Security too early, or without thinking through the consequences, is one of the biggest financial blunders people can make—roughly on a par with buying tech stocks in 2000 or a Las Vegas condo in 2006. The lure of getting money early can blind people to the big cost down the road.

(Many retirees may not have much of a choice. Hard labor at low pay over a lifetime takes its toll on a person. Also, many companies all but force older workers into early retirements.)

In any case, it doesn't take more than just a few years before the total money accrued with the higher, later benefits surpasses the total earned starting at the earlier retirement age.

But that understates the bigger issue. Social Security is insurance. For many retirees, the big risk isn't that they will run out of money before they turn 70, but after 85. According to the Centers for Disease Control, more than half of women currently age 65 will live to 85 or longer, and three out of eight men.

David Blanchett, head of retirement research for financial research firm Morningstar, says it makes sense for women, married couples and those with good health to wait longer for a bigger paycheck.

5. Buying long-term bonds

A surprising number of people still subscribe to the flawed and circular argument that bonds, including long-term government bonds, are "safe." In reality, bonds—especially long-term government bonds—are the rare example of a bubble that has been explicitly declared.

 

Continued in article

Jensen Comment
Owning stock in your employer ---
In some cases Arends is overly influenced by outliers like Enron. For example, owning stock in your employer after the fact was unfortunate if your employer went bankrupt. However, I don't think many employees of Apple, Microsoft, Intel, GE, Exxon, etc. made bad decisions by owning stock in their employers. You should, however, have some diversification in your portfolio.

Spending Too Much on an Expensive Private School
I agree with Arends about spending too much for your kid to go to an expensive private university like Northwestern as an undergraduate, including private universities that are not in the Ivy League. If your kid is a great student who can compete in places like Ohio State University, Texas A&M, the University of Illinois, Texas Tech, UC Berkeley, etc. --- save your own money and minimize student loans until your high-performing child is ready for a very elite graduate school. Then spend as much as you can and fill in with student loans for this child to go to an elite graduate school like Harvard, Chicago, Wharton, Dartmouth, Stanford, Northwestern, USC, etc.

I think you should invest in your promising college senior now rather than before or save it up for her or him when you die at age 88 and the "kid" is 66 years of age.

If your high school senior is less likely to perform well in an undergraduate college program at a reputable and competitive state university, then think about coming up with what it takes to get into the best undergraduate private school you can afford (with student loans) since grades are easier to obtain in nearly all of those private colleges and universities ---
http://www.trinity.edu/rjensen/HigherEdControversies.htm#GamingForGrades

Of course if having your high school graduate interacting with certain religion-affiliated college students is most important to you, then by all means spend more on that private religious college. I can see why a devout Mormon family would shoot for Brigham Young University or a strong Catholic family might shoot for a quality Catholic college. I can understand when a Jewish family prefers Brandeis University. There are many, many college students who meet and marry shortly after graduating from college.

I agree about taking Social Security early ---
don't do it unless you're a multimillionaire.

I don't agree with avoiding long-term bonds in all cases ---
Much depends upon your age and the types of bonds. As you grow older and have a relatively large nest egg, you become less worried about inflation. For example, suppose you are getting a divorce in 2013 from a spouse who is the primary bread winner as a professor. If you are 42 years old and receive half of the TIAA-CREF accumulation in the divorce settlement, avoid the buying lifetime fixed annuity options in TIAA. Inflation will eat you alive if you live beyond your life expectancy (now over 80 for a man or a woman).

On the otherhand, if you're 67 years old at the time of the divorce settlement, inflation becomes somewhat less of a concern. Much depends upon your health and other sources of income such as prospects of remarriage.

When I retired in 2006 I purchased lifetime fixed annuities for my wife and myself. And then I put nearly all of our remaining discretionary savings into an insured long-term tax-exempt bond fund from Vanguard. I've not regretted these decisions for an instant since I retired. Both of these investments weathered the 2007 economic crash like the Rock of Gibraltar. Returns from our lifetime annuities will never vary, although our fixed annuity returns negotiated in 2006 are higher than can be negotiate from TIAA in 2013. Thank the Quantitative Easing policy of the Fed for the unfortunate low interest rate alternatives on safe lifetime savings.

Returns in our long-term tax exempt bond fund remain relatively high because this is a long-term bond fund. Inflation would kill us if we were younger. But since we are both over seventy years of age, we're less worried about inflation and enjoy our comfortable-living monthly cash flows that are tax exempt. I don't much care how the values of our shares in the tax-exempt fund fluctuate since I don't intend to cash in on anything except parts of the annual cash yield on those shares.

My point is that all investors should not avoid long-term bond funds as Arends advises. Only some, primarily younger investors, should maybe ipso facto avoid such long-term bond funds. But keep in mind that bond prices in general are negatively correlated with interest rates. When interest rates are very low, like now, bond prices are relatively high. Arends has a point here! The bond prices were better in 2006 when I retired, but things become confounded by risk.

Tax exempt bonds in general are higher risk than AAA corporate bonds, which is why I prefer to invest in a very huge and diversified fund of tax exempt bonds that can weather the storm of unavoidable bankruptcies in some municipalities and school districts. There is also some risk that tax reform will reduce some of the benefits of tax exempt investments. For example, the degree of tax exemption might eventually be tied to adjusted gross income such that there's tax reform risk of having a very, very high proportion of your annual income being tax exempt.

Reaching for yield is probably a bad choice ---
unless you either are well protected against inflation in other parts or your portfolio or put those cash earnings to work into some very promising investments. For example, if you're land poor because you own real estate that significantly takes as much or more for property taxes than it pays in cash annually then I say go for some yield in your portfolio. Your real estate will most likely counter inflation over the long haul so you need not deprive yourself of the cash needed to pay your property taxes and some first-class accommodations on cruises to scenic places.

"A More Complicated — and More Dangerous — Fear," by jcoumarianos, Institutional Imperative, March 30, 2013 ---
http://www.institutionalimperative.com/2013/03/30/a-more-subtle-and-more-dangerous-fear/

When people talk about “fear and greed” in the markets, they usually mean fear of loss by “fear.” However, often a stronger fear is fear is missing upside. Listen to Jeremy Grantham talk about how many clients he lost  in the late 1990s for his conservative posture, or note that Steve Romick lost 90% of his investors during the same period for his, and you’ll understand that more subtle, but no less insidious, portfolio-damaging, fear. This is a kind of strange fear mixed with, not opposed to, greed.

It turns out, investors tolerate losses reasonably well as long as everyone else is losing. It’s kind of the investment version of misery loves company. Lose your clients’ money when everyone else is losing, and you’ll very likely keep your job. Lag a roaring market, however, and you’ll get dropped in a hurry.

This weekend the WSJ has a story about a couple, both physicians, who have re-entered the market after losing half their savings in the crash of 2008-2009, and parking their money in a bank account until now. The article notes

[t]his week, as the Dow Jones Industrial Average and Standard and Poor’s 500-stock index pushed to record highs, Ms. White and her husband hired a financial adviser and took the plunge back into the market.

The following graph shows what the physician couple missed by selling stock and moving to a bank account at the market’s nadir.

Continued in article

April 9, 2013 message from Ruth Bender

I thoughts some of you might be interested in some of the material below, which comes from a Symposium from the UK’s Higher Education Academy.

The site is http://blogs.heacademy.ac.uk/social-sciences/2013/03/21/teaching-developments-in-finance-and-accounting/

Regards

Ruth

______________________________
Dr Ruth Bender

Reader in Corporate Financial Strategy

Cranfield School of Management
 

Tel: +44 (0) 1234 751122 ext 3183
http://www.cranfield.ac.uk/som

 

www.Twitter.com/Ruth999

 

Winchester Business School hosted the first symposium of the Higher Education Academy’s Social Science Workshop series on teaching developments in finance and accounting.  It consisted of three sessions each considering the findings of three HEA funded projects completed by University of Winchester academics and aimed at providing best practice guidelines for dissemination across the sector.

Best practice in Using Simulation Games in Finance Education aimed to obtain a snapshot of current usage of finance related simulation games in UK higher education, investigating the curriculum design issues involved, identifying any barriers to simulation use and how they may be overcome. The report gives an overview of key finance simulations for classroom use and provides a best practice guideline on how to best select, set-up, use and assess performance on financial simulation games for either undergraduate or postgraduate finance modules.

This report is available via: www.heacademy.ac.uk/assets/documents/disciplines/social-sciences/Blog/simulations_finance.pdf

Best practice in Teaching Ethics in UK Accounting Programmes project aimed to develop a best practice guideline document on the teaching of ethics in accounting education. The report reviews the literature on teaching ethics in business and accounting with a particular focus on evidence of good practice, what should be taught, how it should be taught (methods, approach, as stand-alone or embedded, etc), expected learning outcomes, and means to assess learning. The report presents a snapshot of current practice in teaching ethics in Accountancy programmes in the UK, including curriculum content, methods of teaching, where it is placed in the curriculum, and means of assessing learning outcomes. The report investigates the curriculum design issues involved in the embedding ethics education into the Accountancy curriculum and how to address these issues. This report is available via: www.heacademy.ac.uk//assets/documents/disciplines/social-sciences/Blog/Ethics_in_accounting_report.pdf

Obtaining a snapshot of current usage of ICT for assessment and feedback on undergraduate accounting modules in UK higher education was the aim of the Best practice in the use of ICT for Assessment and Feedback project. The report identifies the barriers and problems with the use of ICT for assessment and feedback and how they may be overcome, investigates students’ perceptions and attitude to the use of ICT for assessment and feedback using a case study approach and provides a best practice guideline document on how to use ICT for assessment and feedback on accounting modules at undergraduate level. This report is available via: www.heacademy.ac.uk/assets/documents/disciplines/social-sciences/Blog/ict_in_assessmentandfeedback.pdf

Presentations

Siew Min (Amy) Tan and Neil Marriott presented their work on the use of simulations to teach finance (presentation can be accessed via www.heacademy.ac.uk/assets/documents/disciplines/social-sciences/Blog/MarriotandTan.ppt)

Paul Jennings discussed the integration of ethics into undergraduate accounting programmes (presentation can be accessed via www.heacademy.ac.uk/assets/documents/disciplines/social-sciences/Blog/Teaching_Ethics_Accounting.pdf )

Lim Keong Teoh and  Pru Marriott disseminated their work relating to on-line assessment and feedback in accounting (presentation can be accessed via www.heacademy.ac.uk/assets/documents/disciplines/social-sciences/Blog/MarriottandTeoh.ppt)

The event was organised and hosted by Pru Marriott, Head of Department of Accounting, Economics and Finance, who was delighted to see over 40 delegates from across the UK and Ireland including academics from Exeter, Loughborough, Royal Holloway, Sheffield, Southampton and Waterford come to listen to the innovative pedagogic work of colleagues from her department.  Pru was also pleased to see representatives from three of the UK’s professional accounting bodies indicating that the research has wide appeal and is of relevance to both academics and practitioners.

Lyn Vos, HEA Discipline Lead for Accounting and Finance, was very impressed with the level of attendance and indicated the need for more events in these areas.

Pru and Lim’s work was recently published in the December edition of Accounting Education: an international journal, the official journal of the International Association for Accounting Education and Research based in New York.  Amy, Neil and Paul intend to submit their work to forthcoming specialist academic conferences and journals.

Discussion

The authors are keen to develop their research and would welcome comments, suggestions or possible collaboration opportunities with academics across the UK.

 Ruth

Bob Jensen's threads on education technology ---
http://www.trinity.edu/rjensen/000aaa/0000start.htm

City Government Fraud and Incompetence:  The Rule Rather Than the Exception

"Stockton, CA Filing Bankruptcy," by Ann-Marie Murrell, Townhall, April 2, 2013 ---
http://finance.townhall.com/columnists/ann-mariemurrell/2013/04/02/way-to-go-unions--stockton-ca-filing-bankruptcy-n1555096?utm_source=thdaily&utm_medium=email&utm_campaign=nl

. . .

“In the 1990s,” Miller said, “Stockton granted its employees some of the most generous and unsustainable labor contracts in the State of California... Safety employees could now retire at the age of 50...Many safety retirees today earn 90 to 100 percent of what they made when they were still on the job.”

Miller also talked about the city granting things like “unlimited vacation and sick time” that could be “cashed out when an employee retired” and “Lamborghini” style health plans.

 

Other outrageous expenditures have been coming out of Stockton for years.  From StocktonFireFacts.com, here are the top 10 boondoggles:

1. City Council spent $48 Million to purchase a new City Hall building for itself. That’s just the purchase price and the cost to pay Wall Street to BORROW the money necessary for the new governmental palace.  The total cost of the building after all the interest is calculated?  We don’t know and the City Council never asked.

City Hall Report & Bond Documents

2. $33 Million settlement with Howard Jarivs Taxpayers Association due to the City illegally using Water Utility fees to fund the construction of the Stockton Events Center.

• City Repayment Schedule?• Stockton Record Article

3.  $22 million sunk into money losing Downtown Marina and has racked up $700,000 in annual operating cost losses. During the height of a City budget crisis, the Stockton City Council sunk $22 million into building a new downtown marina and then due to underestimating the costs, needed to add another $2.3 million to the bill.  City bureaucrats estimated that the marina would lose $100,000 a year.  The actual figure has balloned to $700,000 in losses a year.

Rising tide of red ink | Recordnet.com

Dry Dock Expenditure

4.  Paid $1.25 million over the independent appraisal value for a piece of property owned by a former councilmember. The site was supposed to be used for a new fire station, which even the Stockton Fire Department stated it didn’t want. The Stockton Record’s Editorial Board urged the Council to reject the deal, stating, “the city shouldn’t be dopey. It should pay no more than the appraised value.” Unfortunately, Dopey won at that Council meeting. The Council this year scrapped plans for the fire station, meaning that $2.75 million taxpayer funds have been wasted.  You can view the property here.

• Stockton ponders $2.75M land deal highlighted?• White editorial?• Council slashes program funding | Recordnet.com

5. $4 million legal settlement because the City failed to maintain our sewer system, causing too many sewage spills and violating the Federal Clean Water Act.

• Cal Tax Article?• Stockton to Pay $4 Million in Sewer Spill Settlement?• California Sportfishing Protection Alliance Settlement

6. $7 million loss at entertainment venues (Stockton Arena, Stockton Ballpark, Bob Hope Theater, etc.) subsidized by the City General Fund—which pays for firefighters and police officers

• Stockton Venue continue a troubling trading for taxpayers | Recordnet.com

7. $25,000 to clean up elephant dung at the Stockton Arena.We’d write more, but why?

• Cal Tax Article

8. $205,000 settlement for City’s failure to meet Americans with Disabilities Act requirements within the city. Note that in addition to the settlement, money needed to be spent to bring facilities into compliance. We do not have that total

• ADA Settlement Agreement

9. $200,000 settlement with the Building Industry Association of the Delta due to City improperly using development fees to pay for General Fund services.

• BIA Settlements?• BIA Settlements article

10. $400,000 settlement with the San Joaquin Hotel & Motel Property Owner’s Association for devaluing property prior to the City attempting to purchase them.

None of this is anything new, and sadly none of it is surprising.  For years now, California’s state priorities have been all about satisfying unions and union workers at the expense of students and taxpayers.  Of course, anyone who regularly listens to KFI’s Jon and Ken Show in Los Angeles knew this was going to happen, and the only real surprise is that more California cities haven’t already gone belly-up.  However, Stockton probably won’t be alone for very long; many are predicting that other cities have been waiting for someone to be the first ‘fall guy’ and more bankruptcy proceedings will almost certainly follow suit.   

The thing Stockton (and Bell and others) never seem to figure out is that promising insane, out-of-control “forever pensions” to anyone who works in a public capacity is impossible to maintain.  You’d also think that parents of public school students would be a little curious as to why they have had to dip into their own pockets to buy things like books and lab equipment when the average (union) California teacher makes around $83,000 (total compensation, according to Salary.com)

 

Continued in article

Jensen Comment
The sad thing is nobody will be held accountable for this fraud. Sadly such frauds became the rule rather than the exception in city governments across the USA where kickbacks are a way of doing business.

The Sad State of Government Accounting and Accountability ---
http://www.trinity.edu/rjensen/Theory02.htm#GovernmentalAccounting

Bob Jensen's Fraud Updates ---
http://www.trinity.edu/rjensen/FraudUpdates.htm

"The Ethics of Profit Repatriation by U.S. Multinationals:  U.S. Companies Using Short-Term Loans to Avoid Taxes on Repatriated Cash," by Steven Mintz, Ethics Sage, April 1, 2013 ---
http://www.ethicssage.com/2013/04/the-ethics-of-profit-repatriation-by-us-multinationals.html 

I have previously blogged about the use of transfer pricing techniques by U.S. companies to shift profits away from the U.S., which has the highest corporate tax rate (about 40%), to countries with lower tax rates such as Ireland (12.5%). As long as profits made overseas are not repatriated back to the U.S., those overseas profits remain untaxed by the IRS. Critics claim that a much lower tax rate (say, 15-20%) would encourage U.S. companies to bring the profits home in the form of investments and spur economic development and job growth.

Other countries have come to realize their corporate tax rates are too high. For example, Germany has reduced its rate from a high of 45% in 2008 to 15% today. The UK has gradually lowered its rate from 52% in 1981 to a projected 20% in 2015.

Repatriation is more than an economic issue; it has ethical overtones. It also highlights a practice used by some U.S. companies to skirt the repatriation law by taking the “trapped” overseas cash and providing loans to their U.S. parent companies. Under U.S. tax rules, a foreign subsidiary can lend funds to its parent without jeopardizing its untaxed status. Here is how it works:

• The loans have to be short term and can remain outstanding throughout a fiscal quarter as long as they don't cross beyond its end. If they do cross a quarter, they can remain outstanding for a total of 30 days. And that can be done for 60 days a year by any one foreign unit.
• If the borrowing is carefully set up to comply with IRS rules and U.S. auditing standards, the funds can be used over and over without incurring taxes.
• Companies are not required to disclose these moves, which makes it difficult to assess how many use them.

According to the Wall Street Journal, Hewlett-Packard (H-P) entities lent the parent about $6 billion in the year that ended in October 2010. For the 2011 fiscal year and through July 2012, the average outstanding balance of the alternating loans was $1.6 billion.

The sums rivaled H-P's borrowings in the commercial-paper market—the traditional source of big firms' day-to-day funds. Those averaged $1.9 billion over the 2011-2012 period.

More details of H-P's transactions have emerged since a 2012 hearing conducted by the U.S. Senate. The company said it told the Senate panel it used the alternating loans for all but 85 days of the 2011 and 2012 fiscal years. In a 2008 internal presentation, H-P called the loans "the most important source of U.S. liquidity for repurchases and acquisitions."

H-P spokesman Michael Thacker says H-P has "complied fully with all applicable provisions of the U.S. Internal Revenue Code, and auditor Ernst & Young has consistently reviewed and approved the accuracy of H-P's financials." The IRS has never raised concerns about the loan programs, he adds.

American concerns have long argued they should be allowed to bring back some of the estimated $1.7 trillion in profits they hold at their foreign subsidiaries, saying the money could be put to use in the U.S. The firms claim to be deterred by the huge tax liabilities they would incur under current IRS tax rates.

The U.S. is the only major economy that taxes its companies' overseas earnings. Those taxes aren't actually incurred until the money is considered to have been transferred to the U.S. parent, giving companies an incentive to maximize their earnings at foreign subsidiaries and keep them there indefinitely.

People on both sides of the debate argue the system doesn't work, creating perverse incentives that distort companies' balance sheets and deprive the U.S. Treasury of tax revenue. The short-term loans to avoid repatriation and taxes is the main example of the practice.

During the last Presidential election, business interests called for a “tax holiday,” in which American corporations would be allowed to transfer their foreign profits to their American bank accounts at a tax rate under 6 percent for one year. Such a holiday would raise revenues and create jobs in the U.S., according to the WinAmerica Campaign, a coalition of companies including Apple, Google and Pfizer.  

But the last time such a holiday was tried, in 2004, it raised less than $19 billion and did not substantially increase jobs. Most of the repatriated profits went to corporate shareholders, through dividends or stock repurchases.

Instead of a one-off holiday, some corporations — Caterpillar and Kimberly Clark, for example — have called for a permanent fix: a territorial system for taxing foreign corporate profits, as most industrialized countries use. In a pure territorial system, the profits of multinational companies based in the U.S. would be taxed only by the country in which the profit is earned.

But none of our major trading partners takes a pure territorial approach, for two good reasons. First, almost all countries impose domestic taxes on “mobile” corporate income — for example, investment interest or royalties that can easily be shifted from one country to another. Second, many countries still collect taxes on foreign profits of domestic corporations if those profits are earned in tax havens that collect little or no taxes, like Bermuda and the Cayman Islands. These havens violate the premise of the territorial system, which is that corporate profits are taxed somewhere in the world at a reasonable rate.

Continued in article

 Reporting Discontinued Operations
On April 2, 2013, the FASB issued a proposal that changes the criteria for reporting discontinued operations. The proposal also enhances disclosure requirements for discontinued operations and adds new disclosures for individually material dispositions that do not qualify as discontinued operations.
From PwC --- Click Here
http://www.pwc.com/us/en/cfodirect/publications/in-brief/2013-18-fasb-issues-exposure-draft-on-reporting-discontinued-operations.jhtml?display=/us/en/cfodirect/publications/in-brief&j=93936&e=rjensen@trinity.edu&l=309364_HTML&u=5080218&mid=7002454&jb=0

"Groupon Revisited: New Mission, New Reporting Issues," Anthony H. Catanach, Jr., Grumpy Old Accountants, March 29, 2013 ---
http://grumpyoldaccountants.com/blog/2013/3/29/groupon-revisited-new-mission-new-reporting-issues

Bob Jensen's threads on Groupon ---
http://www.trinity.edu/rjensen/Fraud001.htm
Do a word search for Groupon

"Federal Tax Crimes, 2013," by John A. Townsend , SSRN, February 5, 2013 ---
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2212771

Abstract:     
This is the 2013 01 edition of the Federal Tax Crimes book that I started many years ago for use in a Tax Fraud and Money Laundering course at the University of Houston Law School. With some colleagues, we substantially revised that earlier version into a separately targeted book, titled Tax Crimes published by LEXIS-NEXIS. The full title of the LEXIS-NEXIS book is John Townsend, Larry Campagna, Steve Johnson and Scott Schumacher, Tax Crimes (LEXIS-NEXIS Graduate Tax Series 2008).

This pdf text offered here is a self-published version of my original text that I have kept up since publication of the LEXIS-NEXIS book. The LEXIS-NEXIS book is more suitable for students in a classroom setting and is targeted specifically for graduate tax students. This pdf book I make available here is not suitable for students in a class setting, but is more suitable for lawyers in practice, covering far more topics and with far more detail and footnotes that may be helpful to the busy practitioner. It cannot be used fruitfully for the target audience of the LEXIS-NEXIS book.

Bob Jensen's Fraud Updates ---
http://www.trinity.edu/rjensen/FraudUpdates.htm

The Big Problem for MOOCs Visualized ---
https://mail.google.com/mail/u/0/?shva=1#inbox/13dca6e0fa137324

 

MOOCs — they’re getting a lot of hype, in part because they promise so much, and in part because you hear about students signing up for these courses in massive numbers. 60,000 signed up for Duke’s Introduction to Astronomy on Coursera. 28,500 registered for Introduction to Solid State Chemistry on edX. Impressive figures, to be sure. But then the shine comes off a little when you consider that 3.5% and 1.7% of students completed these courses respectively. That’s according to a Visualization of MOOC Completion Rates assembled by educational researcher Katy Jordan, using publicly available data. According to her research, MOOCs have generated 50,000 enrollments on average, with the typical completion rate hovering below 10%. Put it somewhere around 7.5%, or 3,700 completions per 50,000 enrollments. If you click the image above, you can see interactive data points for 27 courses.

If you’re a venture capitalist, you’re probably a little less wowed by 3,700 students taking a free course. And if you’re a university, you might be underwhelmed by these figures too, seeing that the average MOOC costs $15,000-$50,000, while professors typically invest 100 hours in building a MOOC, and another 8-10 hours per week teaching the massive course. And then don’t forget the lousy contract terms offered by MOOC providers like edX – terms that make it hard to see how a university will recoup anything on their MOOCs in the coming years.

Right now, universities are producing MOOCs left and right, and it’s great deal for you, the students. (See our list of 300 MOOCs.) But I’ve been around universities long enough to know one thing — they don’t shell out this much cash lightly. Nor do professors sink 100 hours into creating courses that don’t count toward their required teaching load. We’re in a honeymoon period, and, before it’s over, the raw number of students completing a course will need to go up — way up. Remember, the MOOC is free. But it’s the finishers who will pay for certificates and get placed into jobs for a fee. In short, it’s the finishers who will create the major revenue streams that MOOC creators and providers are relying on.

Jensen Comment
The above article brought to mind all the many, many books I checked out from libraries or purchased that I must honestly say I did not finish. Unless there are incentives to read to the end, we're a society of waders who stick our feet into the waters without becoming fully submerged. A better phrase might be "curiosity dabblers."

I think that signing up for a MOOC course in most instances is motivated by curiosity much like checking out a book from the library just to "check it out."

The reasons we don't finish a book or a MOOC are many and varied.

For many of us leisure reading is motivated by little else other than curiosity and leisure entertainment. Finishing a book or MOOC is not a burning goal in life unless we are facing a competency-based examination covering the entire book or MOOC.

Most of us underestimate how busy we will become before we finish a book or a MOOC.

Most of us have to be very selective about where we devote our big sweat concentrations in learning. Great learning, like great exercise/sex, cannot be attained without deep, deep concentration and heavy sweating. Little bits are fine and fun, but the great finishes take lots of sweat.

Most of us are easily bored.

Most of us are easily disappointed.

Most of us end our flight and get back home without quite finishing the book that occupied our time while traveling.

Most of us in our senior years doze off without props/pokes to stay awake. Reading is bad enough. Operas, long sermons, and lectures are deadly. So are long drives --- which is why I prefer that Erika take the wheel when our destination is more than 30 miles. She likes driving. I've always hated driving like I hate other wastes of time. In my entire life I would never have opted for a job that had a long commute. Traffic jams and long lines in general drive me nuts.

Bob Jensen's threads on MOOCs, EdX, and MITx ---
http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

"Students Avoid ‘Difficult’ Online Courses, Study Finds," by Ann Schnoebelen, Chronicle of Higher Education, April 26, 2013 ---
http://chronicle.com/blogs/wiredcampus/students-avoid-difficult-online-courses-study-finds/43603?cid=wc&utm_source=wc&utm_medium=en

Jensen Comment
Students just don't understand that when done correctly online courses can have more rather than less interactions with the instructor and other students who can help them. Of course, not all distance education courses are "done correctly/"  MOOC classes tend to be so huge that interactions are minimized. MOOCs, however, often have some of the best lecturers in the world and are sought after because they are free. MOOCs sometimes take advantage of technology like screen cast videos that can be repeated over and over until mastered. This is also the idea behind Khan Academy videos.

Bob Jensen's threads on distance education alternatives around the world ---
http://www.trinity.edu/rjensen/Crossborder.htm

Denny Beresford visited Joe with some interesting advice for accounting students!

Watch for Anaheim Joe on August 7, 2013 at the AAA Meetings

"NICE NEWS (for Joe Hoyle) and GREAT STUDENT ADVICE (from Denny Beresford)," by Joe Hoyle, Teaching Blog, April 4, 2013 ---
http://joehoyle-teaching.blogspot.com/2013/04/nice-news-and-great-student-advice.html

I got the nicest email a few days ago from the president of the American Accounting Association: “I am happy to give you some great news: you have been selected as the recipient of the 2013 Innovation in Accounting Education award for your blog, Joe Hoyle: Teaching -- Getting the Most From Your Students. The award was established to foster innovation and improvement in accounting education through ‘significant programmatic changes or a significant activity, concept, or set of educational materials.’”

I was really thrilled.

As a result, I will make a 90 minute presentation on August 7 at the AAA annual meeting in Anaheim. If you are going to be at that conference, I hope you will stop by.

And, I want to thank everyone who reads this blog for helping to spread the word. We have now had 78,000 page views over the years and my guess is that most of those hits came from you guys telling other folks about the blog. So I believe that the above award should be shared with you. Thanks!!! **

For two days last week, Dennis Beresford – the former chairman of the Financial Accounting Standards Board – was on our campus. He gave talks and presentations to several hundred of our students as well as over 100 members of the local accounting community. It was a wonderful couple of days here at the University of Richmond.

At one presentation, a student in the audience asked “What piece of advice would you give to us as college students?” That was a very legitimate question to ask a person who has been so very successful in the business world and as a college educator.

I did not try to write down every word that Mr. Beresford said in response but I did love his answer and I want to paraphrase it here. He paused for a moment and then talked about students often being too interested in focusing on getting 120 hours of nothing but accounting. He spoke about the importance of gaining a broader education and coming to appreciate classes outside of accounting and business.

I wish I could have written down every word because it was a great answer. I could not have agreed more to what he said. A college education should be about creating a foundation for a thoughtful life rather than a quest for a first job. Understanding accounting is, of course, important but college needs to be about more than just making sure the debits equal the credits. If that is all a person wants to learn, life is going to be very dull.

After Mr. Beresford’s talk, I started thinking about how to encourage my students to develop that kind of attitude. I certainly want my students to learn lease accounting and pension accounting but I also want them to appreciate art, literature, and the like. How do you push a student to go outside of his or her comfort zone?

Luckily, registration for the fall semester is coming up so the selection of courses is on everyone’s mind at the moment. I quickly wrote a note to our seniors graduating in accounting and asked each of them to hit reply and tell me the name of the best course they had ever taken at the University of Richmond outside of the Robins Business School. I explained what I wanted to do and asked them to identify that special, non-business course.

Almost immediately, a long list of courses started pouring into my email account. Several students listed multiple courses they would recommend. I had not asked for any type of explanation but many of the students wrote out glowing comments about a particular course and what they had learned.

To me, the list was thoroughly fascinating including such courses as Hebrew Prophets, Justice in Civil Society, The Propaganda State, Minds and Machines, Leadership and Economic Policy, Thomas Jefferson and Revolutionary American, Introduction to Film Studies, Civil Rights and Civil Liberties, Lincoln, Saints and Sinners in Muslim Literature, Elementary Symbolic Logic, Introduction to Environmental Studies, and Global Women Writers.

The list was so interesting that I was ready to go back to college and take many of the courses myself.

Continued in article

"A Nose for Honest Financial Statements," by David Albrecht, Summa, April 1, 2013 ---
http://profalbrecht.wordpress.com/2013/04/01/a-nose-for-honest-financial-statements/

Pretending to be a shoeless and homeless bum is good business
"Bum given boots by kind-hearted cop is back to begging barefoot Panhandler has '30 pairs of shoes'," by M.L. Nestel, Kevin Fasick, and Bob Fredericks, The New York Post, March 26, 2016 ---
http://www.nypost.com/p/news/local/manhattan/kind_cop_bum_goes_from_gift_to_grift_93SD0wxjPPCxm7lzZ8vlwM

Jensen Comment
Reminds me of the time I followed a fashionably-dressed beautiful woman with two small children through a payment line at a supermarket in San Antonio. She paid for her groceries with food stamps and then a man helped her load the stash into a shiny new Cadillac Escadade (starting around at over $60,000). I overheard her children him "Daddy." My guess is that she had more than 50 pairs of shoes stored at his magnificent house.

Why do any parents want to get married? The food stamp game can be played better without getting married.

"Ten Reasons to Avoid a 30 Year Mortgage," by Roger Schlesinger, Townhall, April 8, 2013 ---
http://townhall.com/columnists/rogerschlesinger/2013/04/08/ten-reasons-to-avoid-a-30-year-mortgage-n1560810?utm_source=thdaily&utm_medium=email&utm_campaign=nl

Jensen Comment
This article reaffirms my opinion that there are very few absolutes when it comes to personal finance. Mr. Schlesinger provides some very good points for some home owners in many economic circumstances.

But I don't think it applies to all home owners in all circumstances. It applied to me for most of the four homes I owned in my younger years (not counting my present home, my ocean cottage in Maine, or the home I inherited from my parents in Iowa). In those instances

But I can think of economic circumstances where I think a 30-year mortgage makes more sense.

Perhaps we can have some AECM debate on this topic.

Beneish M-Score Index for Fraud Detection and Portfolio Selection

April 5, 2013 message from Tom Selling

I'm writing some study materials for CFA Institute and need to include one example of the Beneish fraud (M) score calculation. I haven't run any numbers yet, but I was thinking of doing it for Dell — both before its restatement of 2006 financials and on a restated basis.

Before I run the Dell numbers, I was wondering if anyone had a better example, hopefully showing dramatic results for illustrative purposes, that I should run?

Best, Tom

April 6, 2013 reply from Bob Jensen
Hi Tom,

Joe Wells discusses some of the history and details and provides some warnings in a paper called "Irrational Ratios" ---
http://www.buec.udel.edu/jenkinsd/Articles/Irrational Ratios.htm

. . .

THE NUMBERS DON’T LIE

The most basic analytical techniques (vertical, horizontal and ratio analyses) might have given the auditors for ZZZZ Best some important clues. Since these techniques compare changes in the numbers from year to year, they can point out significant discrepancies. In the ZZZZ Best case, look at what a simple ratio analysis would have revealed (see exhibit 1, below).

Exhibit 1: Selected Ratios From ZZZZ Best

1985 1986 Current ratio of assets to liabilities 36.552 .0977 Working capital: Total assets 0.5851 (0.0080) Collection ratio N/A 26.131 Asset turnover .144 1.041 Debt to equity ratio .017 1.486 Receivables turnover N/A 6.984 Times interest earned N/A 43.136 Cost of sales: Sales .465 .423 Gross margin percentage 53.51% 57.68% Return on equity 183.75% 46.58%

These numbers make no sense at all—they are all over the place. Particularly revealing are the current ratio and the debt to equity and return on equity ratios. The current ratio shows a company with no cash in 1986 despite record “revenues.” The 1986 debt to equity ratio is up 8600% from the prior year; return on equity has dropped by more than 75%. These are not indicators of a legitimate business.

A NEW (1999) APPROACH?

Since the ZZZZ Best case, there have been attempts to develop new analytical techniques to better assist the auditor. In his 1999 article, “The Detection of Earnings Manipulation,” (Financial Analysts Journal, Sep./ Oct.99), Messod D. Beneish—an associate professor at the Kelly School of Business, Indiana University—researched the quantitative differences between public companies that had committed financial statement manipulations and those that had not.

Beneish theorized there may be up to five useful predictors of earnings manipulation, which he defined as “an instance in which a company’s managers violate generally accepted accounting principles (GAAP) to favorably represent a company’s financial performance.” Beneish’s ratios, which he labeled “indexes,” used figures he obtained from financial statements.

Continued in article

Joe goes on to explain the ratios that are instead used in the Benish index.

You might find the following article to be more concise ---
http://articles.businessinsider.com/2011-05-24/markets/30078297_1_earnings-manipulation-financial-ratios-gmi

. . .

Does the Beneish M-Score work?

Beneish used all the companies in the Compustat database between 1982-1992. In his out of sample tests, Beneish found that he could correctly identify 76% of manipulators, whilst only incorrectly identifying 17.5% of non-manipulators. You can read the Cornell University Enron paper referred to above here. 

In a 2007 paper -  The Predictable Cost of Earnings Manipulation - Beneish examines the use of the M score as a stock selection technique (over the period 1993-2003). The M-score strategy apparently generated a hedged return of nearly 14% per annum.  A subsequent paper titled quot;Identifying Overvalued Equityquot; showed that an overvaluation score (O-Score) combining proxies for earnings overstatement, merger activity, stock issuance, and the manipulation of operating activities was able to identify firms with one-year-ahead abnormal price declines averaging -27%.

The  Source:

This is the link to the original paper on the Detection of Earnings Manipulation - as well as to a subsequent paper by Beneish - The Relation between Accruals and the Probability of Earnings Manipulation.

Other Sources

• Alex C Bell on the Beneish Indices
• Analysis ratios for detecting financial statement fraud
• James Montier: Earnings manipulation as source of short ideas

 

Jensen Comment
I have not studied this literature enough to pass judgment and am glad to see you delving into this model.

My reaction to any such models is to apply Darwin's Theory on Survival of the Fittest. If the M-Score was really a great portfolio selection model I think there would be more evidence of it catching on in the investment world.

If the M-Score was really a great fraud detection model I think the SEC and FBI would be employing it widely today. I don't see any evidence of this, but your contacts within the SEC are better than my contacts (virtually zero at this point).

As the saying goes in biology, the proof is in what survives. It's probably too early to write the M-Score off, but I'm not really optimistic. There are too many important variables in both fraud detection and portfolio selection that are not even disclosed in financial statements let alonge booked into the ledger. Hence ratios derived from financial statements are limited at the starting line.

I have my doubts about some of the components of this model. For example, are receivables really a big deal at Dell? I've not looked at Dell's financial statements, but I thought Dell generally collected the money before building a customer's computer. Dell certainly had my money in the bank before building my two fine computers.

One thing that fraudsters might keep in mind is the M-Score model when working up their phony financial statements. ZZZZ Best could easily have invented financial statements that had a pretty good M-Score if the M-Score had been invented and was a big deal at the time.

Fraudsters are really clever at getting around barriers that stand in their way. That's why most of them don't get caught at all or don't get caught until after the damage is done.

"Earnings Manipulation and Expected Returns," by Messod Daniel Beneish, Charles M.C. Lee, and D. Craig Nichols, SSRN, March 31, 2013 ---
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2241717

Abstract:     
An accounting-based earnings manipulation detection model has strong out-of-sample power to predict cross-sectional returns. Companies with a higher probability of manipulation (M-score) earn lower returns on every decile portfolio sorted by size, book-to-market, momentum, accruals, and short interest. The predictive power of M-score stems from its ability to forecast changes in accruals and is most pronounced among low-accrual (ostensibly “high-earnings-quality”) stocks. These findings support the investment value of careful fundamental and forensic analyses of public companies.

Keywords: Equity Investments, Fundamental Analysis (Sector, Industry, Company), Valuation of Individual Equity Securities, Company Analysis, Financial Statement Analysis, Financial Reporting Quality, Aggressive Financial Reporting Techniques

Jensen Comment
I still stand by my knee jerk reaction that any forecasting models using only financial statement data are likely to have missing variable problems because there are so many important variables not contained in the financial statements. I would look first for missing variables affecting  non-discretionary accruals versus discretionary accruals.

And always keep in mind that correlation is not causation.
"How Non-Scientific Granulation Can Improve Scientific Accountics"
http://www.cs.trinity.edu/~rjensen/temp/AccounticsGranulationCurrentDraft.pdf

Hi again Tom,

One thing to think about is that Beneish developed his fraud detection model before FAS 133 was being widely implemented in the USA. As a result it is built financial statement manipulation before many firms shifted tactics for managing earnings.

Among financial institutions and some corporations that newer way of managing earnings is hanky pank in estimation fair values of derivative financial instruments, hanky pank in estimating edge effectiveness, and bending the hedge accounting rules such as taking hedge accounting on oortfolio hedges that seldom qualify for hedge accounting. I don't see how these newer types of earnings management ploys are captured in teh Beneish M-Factor index.

For example, probably the largest earnings management fraud in history was committed by Franklin Raines when he was CEO of the tirllion dollar Fannie Mae. His tactics were all three of the above hanky pank ploys with derivative financial instruments and hedge accounting. I should be recalled that the earnings management was so blatant that KPMG was eventually fired from what was probably its biggest audit client in history ---
http://www.trinity.edu/rjensen/Theory02.htm#Manipulation

As I recall Dell has been accused of some hanky pank accounting for derivative financial instruments. I can't recall the citations of the top of my head, but Dell is certainly a heavy player in hedge accounting ---
http://www.wikinvest.com/stock/Dell_%28DELL%29/Derivative_Instruments

I just cannot see how the M-Score will effective capture hanky pank financial statement manipulation in fair value accounting in general and in particular accounting for speculation and hedging under FAS 133 hanky pank.

Respectfully,
Bob Jensen

Dilbert: The Best Way to Evaluate a Fund ---
http://www.ritholtz.com/blog/2013/04/dilbert-the-best-way-to-evaluate-a-fund/

"Loan Accounting? The Public Can’t Handle the Truth!" by Tom Selling, The Accounting Onion, April 18, 2013 ---
http://accountingonion.com/2013/04/loan-accounting-the-public-cant-handle-the-truth.html

Jensen Comment
Tom never mentions our prior threads on this subject on the AEMC that dealt with such things as difficulties in measuring fair values of troubled loans for which there is no market such a the hog silage lagoon loans of Ole versus Sven.

He never mentions that the FDIC "stress tests" require granulation of details about why Ole's loan is more troublesome than Sven's loan. An assumed market for hog sewage lagoon loans does not drill (granulate) down as to why Ole's loan is more troublesome than Sven's loan even though both loans are in default. The FASB approach allows for recognition of expected payback differences between the two hog farmers. The FDIC, on the other hand, requires this type of information in stress tests.

Tom implies that fair values of troubled loans are not disclosed unless they are booked into the ledgers. He doesn't mention our AECM debates where I propose multi-column reporting with hard-to-estimate and volatile fair values reported in an adjoining column.

He does not mention the volatility in earnings that results from fair value bookings that are not realized and may never be realized.

Since we've been round and round previously I see no need to debate Tom's version of "Truth" once again since he insists that fair values be booked rather than simply reported in an adjoining column.

My answer on fair value accounting is and will remain that the best way to report fair values and changes in OCI are in multiple columns of financial statements.

April 20, 2013 reply from Bob Jensen

Hi Patricia,

Some years back I wrote the following on the AECM ---
http://www.trinity.edu/rjensen/Theory02.htm

To my knowledge the first accountant to assert that fair value accounting was "truth" to my knowledge was Kenneth MacNeal. I've really enjoyed these intense friendly debates about single-column versus multiple column financial statements with Tom Selling and Patricia Walters on the AECM. But I do not want to leave anybody with the impression that I'm an advocate of historical costing balance sheets. I'm opposed to such balance sheets for reasons never envisioned by current value reporting scholars like Kenneth MacNeal, John Canning, Ray Chambers, Bob Sterling, Edgar Edwards, Phillip Bell, and others. I merely advocate a historical cost column in the balance sheet because I believe there is value added in reporting net earnings based upon only legally realized revenues and profits under the matching principle. I do think the historical cost balance accounts are residuals of the realized revenue matching concept that have enormous limitations in terms of evaluating financial opportunities and risks.

The first scholar to ever associate exit value accounting to "Truth in Accounting" to my knowledge was Kenneth MacNeal in the context of going concern accounting (as opposed to personal financial statements and business liquidation accounting). His 1939 book Truth in Accounting made a strong case for exit value accounting.

Scholars Book reprinted MacNeal's classic 1939 Book (ISBN 0914348043 )
http://books.google.com/books/about/Truth_in_Accounting.html?id=zokDYAAACAAJ 

Tom Selling on January 23, 2012 wrote the following ---
http://accountingonion.typepad.com/theaccountingonion/2012/01/

For nearly 100 years leading academics have advocated some type of current cost or value replacement of the historical cost basis of accounting. Historical cost never pretended, as repeatedly noted by AC Littleton, to be valuation accounting. In 1929, John Canning started the ball rolling for current (replacement) cost accounting, which is sometimes called "entry value" accounting. In 1939, Kenneth MacNeal commenced the ball rolling for exit value accounting where buildings, vehicles, and factory machinery are valued at what they can sell for, rather than amortized historical costs.

From an academic standpoint the literature on value accounting has probably been more focused upon the bad features (e.g., goodwill accounting) of historical cost accounting rather than on convincing research that some type of "value" accounting justifies the costs of preparation. The sermons on the evils of historical cost accounting became less convincing as research emerged in the 1990s showing that historical cost accounting really did have value for both earnings and stock price forecasting.

John Canning's current (replacement) cost baton has now been passed to Tom Selling. Like John Canning, Tom advocates that business firms spend tens of billions of dollars annually shifting from traditional historical cost reporting of operating assets to replacement costs. The problem is that replacement cost advocates can point to zero research convincing us that the benefits of such drastic changes in financial statements justify the costs.

Entry (replacement) cost adjustments of historical costs advocated early on in John Canning's famous doctoral dissertation  really is not in the realm of "fair value"  accounting since it is really is only cost-adjusted accounting complete with all the arbitrary accruals that exit value theorists hate such as depreciation and amortization.

So let's return to exit value accounting and "Truth""
"Truth in Accounting:  The Ordeal of Kenneth MacNeal," by S.A. Zeff, The Accounting Review, July 1982.

 MacNeal's book was controversial to say the least and was generally not well received at first, although various scholars picked up the exit valuation ball and ran with it in accounting theory. Highly notable were Accounting Hall of Famers Ray Chambers, Bob Sterling, Edgar Edwards, and Phillip Bell ---
http://fisher.osu.edu/departments/accounting-and-mis/the-accounting-hall-of-fame/membership-in-hall/
Some of MacNeal's deciples were thus inducted into the Hall of Fame whereas he himself has been overlooked.

Shortly thereafter in 1939 Hall of Famers Bill Paton and A.C. Littleton countered MacNeal in their 1940 defense of historical cost accounting on the grounds that it was never intended to be valuation accounting. Rather it focused more on the income statement and the Matching Principle were as a result of double entry accounting the balance sheet was a secondary accumulation of residuals. In fair value accounting the balance sheet is primary and the income statement is an accumulation of residuals that comingle realized transactions with unrealized changes in value.
http://www.trinity.edu/rjensen/theory01.htm#Paton

Whereas some fair value advocates claim that exit value accounting is the only "truth" in accounting, other accounting theorists are more cautious about throwing about the word "truth" --- especially in our Academy where words like "truth" and "proof" are generally avoided outside the context of explicit underlying assumptions that are almost always open to debate.

One of the most popular Excel spreadsheets that Bob Jensen ever provided to his students ---
www.cs.trinity.edu/~rjensen/Excel/wtdcase2a.xls

I will close this tidbit with several articles that I think dispel the notion that fair value accounting is "truth" outside certain concepts and assumptions.

---

Article One (when "truth" is not in fair value earnings

Largely because fair value theorists cannot define net income on anything other than cherry-picked Hicksian theory, the FASB and IASB standard setters instead focus on the balance sheet where think they are on more solid footing conceptualizing  assets and liabilities. This, however, is not without its troubles.
See
"The Asset and Liability View: What It Is and What It Is Not—Implications for International Accounting Standard Setting from a Theoretical Point of View"
Jens Wüstemann, University of Mannheim; Sonja Wüstemann, Goethe University Frankfurt am Main
American Accounting Association Annual Meetings, August 4, 2010
http://aaahq.org/AM2010/display.cfm?Filename=SubID_2022.pdf&MIMEType=application%2Fpdf

I would like you, Tom, and Patricia to especially note the reference to the "stewardship function" below in the context of historical cost accounting.

ABSTRACT
In their current standard setting projects the FASB and the IASB seek to enhance consistency in the application of accounting standards and comparability of financial statements by fully implementing the asset and liability view. However, neither in standard setting nor in the accounting literature is there agreement on what the asset and liability view constitutes. In this paper, we show that the asset and liability view is compatible with different, sometimes even opposing concepts, such as historical cost accounting and fair value accounting, and thus cannot ensure internal consistency on its own. By means of the example of revenue recognition we point out the difficulty to determine the changes in assets and liabilities that shall give rise to revenue. We argue that the increase in assets that leads to revenue is the obtainment of the right to consideration and thus should be focused on by the

Boards.

1. Introduction

A major aim of the FASB and the IASB in their current standard setting projects is to achieve internal consistency of the accounting regimes U.S. GAAP and IFRS (IASB 2008c, BC2.46; IASB 2008a, S3; IASB 2008d, par. 5; IASB 2009, p. 5). One of the reasons for inconsistencies in present U.S. GAAP and IFRS is that recognition and measurement principles and rules are developed on the basis of two competing concepts − the asset and liability view and the revenue and expense view (Wüstemann and Wüstemann 2010).

Until the 1970s the so called revenue and expense view had been prevailing in international accounting standard setting. In the U.S. this view was introduced by Paton and Littleton in the American Accounting Association Monograph No. 3 in 1940 (Paton and Littleton 1940: 1956) and soon became the state of the art in U.S. accounting theory and practice. Similar developments took place in other countries, e.g. Germany, where Schmalenbach (1919) was the main driver for the establishment of the comparable ’dynamic accounting theory’

(Dynamische Bilanztheorie)
According to the revenue and expense view the principal purpose of accounting is to determine periodic net income as a measure of an entity’s effectiveness in using inputs to obtain and sell output (stewardship function) by recognising revenue when it is earned or realised and by matching the related costs with those revenues (FASB 1976, par. 38−42; Paton and Littleton 1940: 1956, p. 10 et sqq.; see for the tradition of the stewardship function Edwards, Dean and Clarke 2009). Some proponents of the revenue and expense view see net income as an indicator of an entity’s ‘usual, normal, or extended performance’ (‘earning power’) (FASB 1976, par. 62) that may help users not only to assess management’s performance but also to estimate the value of the firm (Black 1980, p. 20; Breidleman 1973, p. 654). This requires irregular and random events that distort net periodic profit, such as the receipt of grants and losses from bad debt, to be smoothed out (Beidleman 1973, p. 653 et sqq.; Bevis 1965: 1986, p. 104−107; FASB 1976, par. 59; Schmalenbach 1919, p. 32−36). Under the revenue and expense view the function of the balance sheet is to ‘store’ residuals resulting from the matching and allocation process; the deferred debits and credits depicted in the balance sheet do not necessarily represent resources and obligations (Paton and Littleton 1940: 1956, p. 72−74; Schmalenbach 1919, p. 26; Sprouse 1978, p. 68).

In the 1970s the FASB realised that the key concepts under the revenue and expense view − revenues and expenses − are not precisely definable making earnings ‘unduly subject to the effects of personal opinion about what earnings of an enterprise for a period should be’ (FASB 1976, par. 60). In order to limit arbitrary judgements and to achieve a more consistent income determination the FASB decided to shift the focus to the more robust concepts of assets and liabilities and thus to the asset and liability view as evidenced by the issuance of SFAC 3 Elements of Financial Statements (now SFAC 6) in 1980 (Storey 2003, p. 35 et sqq.; Miller 1990, p. 26 et seq.; see for a similar development in Germany around the same time Moxter 1993). The so called asset and liability view in the U.S. has its origins in the Sprouse and Moonitz monograph that was published in 1962 as part of the AICPA’s Accounting Research Studies.

Under this view all financial statement elements are derived from the definitions of assets and liabilities. Income resulting from changes in assets and liabilities measures an entity’s increase in net assets (FASB 1976, par. 34; Johnson 2004, p. 1; Ronen 2008, p. 184; Sprouse and Moonitz 1962, par. 11, 46, 49). The asset and liability view can serve the purpose to objectify income measurement by restricting recognition in the balance sheet to those items that embody resources and obligations (Sprouse 1978, p. 70). Alternatively, the asset and liability view can be adopted in order to inform users about future cash flows that are expected to flow from an entity’s assets and liabilities, which are supposed to help them in estimating firm value (Scott 1997, p. 159−162; Hitz 2007, p. 333 and 336−338).

Despite the declared shift from the revenue and expense view to the asset and liability view in the 1970s, certain U.S. standards and also the ‘older’ IFRS, for example those on revenue recognition, still follow the revenue and expense view (Ernst & Young 2009, p. 1558; Wüstemann and Kierzek 2005, p. 82 et seq.). In the beginning of the 21st century the FASB and the IASB have begun several projects, above all the Conceptual Framework Project, that shall lead to an all-embracing implementation of the asset and liability view (Wüstemann and Wüstemann 2010).

We observe that both in the accounting literature and the standard setting processes, there is confusion about the meaning and implications of the asset and liability view, especially as regards the role of the realisation principle and the matching principle as well as fair value measurement (see literature review below). A second problem is that the asset and liability view does not provide clear guidance on how assets and liabilities shall be defined and which changes in assets and liabilities shall give rise to income. The FASB and the IASB have − up to now − been struggling with the problem of bringing current revenue recognition guidance in conformity with the asset and liability view for seven years. In December 2008, they finally published a Discussion Paper ‘Preliminary Views on Revenue Recognition in Contracts with Customers’, but the issuance of the new standard is not yet foreseeable.

The aim of this paper is to shed light on the conceptual underpinnings of the asset and liability view, to clarify misunderstandings in the accounting literature and standard setting about its meaning and to discuss implications for international accounting standard setting. The remainder is organised as follows: In the first part of the paper we depict the different opinions that exist with regard to the asset and liability view and then clarify the concept by defining recognition and measurement principles as well as purposes of financial statements that are compatible with this view. Subsequently, we analyse in how far the asset and liability view is implemented in present U.S. GAAP and IFRS and in which areas accounting principles still exist that oppose the asset and liability view. In the final part we point out the difficulty to define assets and liabilities taking the current FASB’s and IASB’s joint project on revenue recognition as an example and make suggestions for improvement.

Continued in article
 http://aaahq.org/AM2010/display.cfm?Filename=SubID_2022.pdf&MIMEType=application%2Fpdf

Conclusion
And after all these years of trying the standard setters have not yet come up with standards that are very good for evaluating financial performance of business firms, something that they are well aware of in Australia ---
"GAAP Based Financial Reporting:  Measurement and Business Performance" --- Click Here
http://www.charteredaccountants.com.au/Industry-Topics/Reporting/Resources-and-toolkits/~/media/Files/Industry topics/Reporting/Resources and toolkits/Reports/GAAPbased_financial_reporting.ashx

 I think the major problem, aside from the cost of generating more relevant and reliable information, is that standards setters never look beyond single-column financial statements that inevitably lead them to horrid mixed model measurements that destroy aggregations into summary measures like "Total Assets" and "Net Income." Bob Herz recommends doing away with aggregating net income metrics. I recommend having multiple columns and multiple net income aggregations.
See http://www.trinity.edu/rjensen/theory02.htm#ChangesOnTheWay

 

Article Two (when "truth" is not in fair value earnings)

Spinning Debt Into Earnings With the Wave of a Fair Value Accounting Wand
"Euro banks' £169bn in accounting alchemy," by: Lindsey White, Financial Times Advisor, January 19, 2009 --- Click Here

European banks conjured more than £169bn of debt into profit on their balance sheets in the third quarter of 2008, a leaked report shows.

Money Managementhas gained exclusive access to a report from JP Morgan, surveying 43 western European banks.

It shows an exact breakdown of which banks increased their asset values simply by reclassifying their holdings.

Germany is Europe's largest economy, and was the first European nation to announce that it was in recession in 2008. Based on an exchange rate of 1 Euro to £0.89, its two largest banks, Deutsche Bank and Commerzbank, reclassified £22.2bn and £39bn respectively.

At the same exchange rate, several major UK banks also made the switch. RBS reclassified £27.1bn of assets, HBOS reclassified £13.7bn, HSBC reclassified £7.6bn and Lloyds TSB changed £3.2bn. A number of Nordic and Italian banks also switched debts to become profits.

Banks are allowed to rearrange these staggering debts thanks to an October 2008 amendment to an International Accounting Standards law, IAS 39. Speaking to MM, IAS board member Philippe Danjou said that the amendment was passed in "record time".

The board received special permission to bypass traditional due process, ushering through the amendment in a matter of days, in order to allow banks to apply the changes to their third quarter reports.

However, it is unclear how much choice the board actually had in the matter.

IASB chairman Sir David Tweedie was outspoken in his opposition to the change, publicly admitting that he nearly resigned as a result of pressure from European politicians to change the rules.

Danjou also admitted that he had mixed views on the change, telling MM, "This is not the best way to proceed. We had to do it. It's a one off event. I'd prefer to go back to normal due process."

While he was reluctant to point fingers at specific politicians, Danjou admitted that Europe's "largest economies" were the most insistent on passing the change.

As at December 2008, no major French, Portuguese, Spanish, Swiss or Irish banks had used the amendment.

BNP Paribas, Credit Agricole, Danske Bank, Natixis and Societe Generale were expected to reclassify their assets in the fourth quarter of 2008.

The amendment was passed to shore up bank balance sheets and restore confidence in the midst of the current credit crunch. But it remains to be seen whether reclassifying major debts is an effective tactic.

"Because the market situation was unique, events from the outside world forced us to react quickly," said Danjou. "We do not wish to do it too often. It's risky, and things can get missed."

---

Article Three (when amortized cost seems to more of the "truth")

"Amortized Cost Accounting is “Fair” for Money Market Funds," U.S. Chamber of Commerce Center for Capital Markets Competitiveness, Fall 2012
http://www.centerforcapitalmarkets.com/wp-content/uploads/2010/04/Money-Market-Funds_FINAL.layout.pdf

Summary

Recent events have caused the U.S. Securities and Exchange Commission (SEC) to rethink the long-standing use of amortized cost by money market mutual funds in valuing their investments in securities. This practice supports the use of the stable net asset value (a “buck” a share) in trading shares in such funds. Some critics have challenged this accounting practice, arguing that it somehow misleads investors by obfuscating changes in value or implicitly guaranteeing a stable share price.

This paper shows that the use of amortized cost by money market mutual funds is supported by more than 30 years of regulatory and accounting standard-setting consideration. In addition, its use has been significantly constrained through recent SEC actions that further ensure its appropriate use. Accounting standard setters have accepted this treatment as being in compliance with generally accepted accounting principles (GAAP). Finally, available data indicate that amortized cost does not differ materially from market value for investments industry wide. In short, amortized cost is “fair” for money market funds.

Background

Money market mutual funds have been in the news a great deal recently as the SEC first scheduled and then postponed a much-anticipated late August vote to consider further tightening regulations on the industry.1 Earlier, Chairman Mary Schapiro had testified to Congress about her intention to strengthen the SEC regulation of such funds, in light of issues arising during the financial crisis of 2008 when one prominent fund “broke the buck,” resulting in modest losses to its investors. Sponsors of some other funds have sometimes provided financial support to maintain stable net asset values. And certain funds recently experienced heavy redemptions due to the downgrade of the U.S. Treasury’s credit rating and the European banking crisis.

Money market funds historically have priced their shares at $1, a practice that facilitates their widespread use by corporate treasurers, municipalities, individuals, and many others who seek the convenience of low-risk, highly liquid investments. This $1 per share pricing convention also conforms to the funds’ accounting for their investments in short-term debt securities using amortized cost. This method means that, in the absence of an event jeopardizing the fund’s repayment expectation with respect to any investment, the value at which these funds carry their investments is the amount paid (cost) for the investments, which may include a discount or premium to the face amount of the security. Any discount or premium is recorded (amortized) as an adjustment of yield over the life of the security, such that amortized cost equals the principal value at maturity.

Some commentators have criticized the use of this amortized cost methodology and argued for its elimination. In a telling example of the passionate but inaccurate attention being devoted to this issue, an editorial in the June 10, 2012, Wall Street Journal described this longstanding financial practice in a heavily regulated industry as an “accounting fiction” and an “accounting gimmick.”

. . .

Reasoning for Use of Amortized Cost

The FASB has been considering various aspects of the accounting for financial instruments for approximately 25 years. During that time it has issued standards on topics such as accounting for marketable securities, accounting for derivative instruments and hedging, impairment, disclosure, and others. Also, the FASB has issued standards or endorsed standards issued by the AICPA of a specialized nature applying to certain industry groups such as investment companies, insurance companies, broker/dealers, and banks. Further, the FASB is presently involved in a major project that has encompassed approximately the past 10 years, whereby it is endeavoring to conform its standards on financial instruments to the related standards issued by the International Accounting Standards Board. Aspects of that project have stalled recently, and the two boards have reached different conclusions on certain key issues. Other aspects of that project are moving forward.

Over this 25-year period, probably the most controversial aspect of the financial instruments project has been to what extent those instruments should be carried at market or fair value in financial statements rather than historical cost. On several occasions the FASB has indicated a strong preference for fair value as a general objective. But there has been a great deal of opposition from many quarters, and the FASB has tended to determine the appropriate measurement attribute for particular instruments (fair value, amortized cost, etc.) in different projects based on the facts and circumstances in each case.

. . . (very long passages from this 21-page article are not quoted here)

Conclusion

Accounting for investment securities by money market mutual funds appropriately remains based on amortized cost. The amortized cost method of accounting is supported by the very short-term duration, high quality, and hold-to-maturity nature of most of the investments held. The SEC’s 2010 rule changes have considerably strengthened the conditions under which these policies are being applied. As a result of the 2010 SEC rule changes, funds now report the market value of each investment in a monthly schedule submitted to the SEC that is then made publicly available after 60 days. That provides additional information for investors. And the FASB’s current thinking articulates this accounting treatment as GAAP.

 

Jensen Comment
My main objection to booking fair values of HTM investments is that the interim adjustments for fair values that will never be realized destroys the income statement. Of course, the FASB and IASB have systematically destroyed the concept of net earnings in many other standards to a point where these standard setters can no longer even define net earnings.

Research Studies from the Chamber's Center for Capital Markets ---
http://www.centerforcapitalmarkets.com/resources/publications/

 

---

Article Four (a video)

Frank Partnoy and Lynn Turner contend that Wall Street bank accounting is an exercise in writing fiction:
Watch the video! (a bit slow loading)
Lynn Turner is Partnoy's co-author of the white paper."Make Markets Be Markets"
"Bring Transparency to Off-Balance Sheet Accounting," by Frank Partnoy, Roosevelt Institute, March 2010 ---
http://www.rooseveltinstitute.org/policy-and-ideas/ideas-database/bring-transparency-balance-sheet-accounting
Watch the video!

 

"Report: Apple returned 8 million shoddy iPhones to Foxconn," by Simon Sharwood, The Register, April 22, 2013 ---
http://www.theregister.co.uk/2013/04/22/apple_returns_iphones_to_foxconn/

. . .

With a cost to manufacture of $US200 apiece, Foxconn is apparently preparing to take a hit of up to $1.6bn to cover the cost of making replacement handsets. China Business suggests the cost of making new iPhones represents further bad news, not a reason for Foxconn's recently-revealed financial woes.

China Business is silent on which model of iPhone failed Apple's quality tests. If it's the current iPhone 5, or the still-on-sale 4S, the impact of eight million phones failing to appear would punch a two-or-three-week hole in Apple's supply chain, an assertion we make on the basis that the company says it sold 47.8m handsets in its last quarter. That quarter included Christmas, so we can safely assume the January-March quarter sees a little less handset-selling action.

If the botched phone is a newer-and-as-yet-unreleased handset, it could be grounds for a delay in its announcement or release.

"Why Baseball Seats Should be Priced like Airline Tickets," by Rafi Mohammed, Harvard Business Review Blog, April 5, 2013 --- Click Here
http://blogs.hbr.org/cs/2013/04/why_baseball_tickets_should_be.html?referral=00563&cm_mmc=email-_-newsletter-_-daily_alert-_-alert_date&utm_source=newsletter_daily_alert&utm_medium=email&utm_campaign=alert_date

Jensen Comment
There are obvious similarities in pricing baseball seats and airplane seats. In both instances most of the costs are fixed either for the season and/or for a given episode (game or flight). Hotels and airlines now cooperate with online services that sell vacant seats at bargain prices as the date of the episode approaches. Perhaps airlines would also benefit from such pricings since empty seats contribute zero toward fixed costs.

One difference is that many airline flights fly almost full at normal pricing. This is especially the case on nearly all Southwest Airlines flights. It is also the case for all airlines on their long routes such as between the U.S. and Australia and the U.S. and parts of South America.

Another complication is that many flights from the boondocks to airport hubs are merely legs of longer flights. Discounting merely one leg of a longer flight may not entail all that much savings on total trip costs. Baseball games are not legs to "trips" unless they are part of an entitle travel package that includes airline tickets, hotel reservations, ground transportation, and games.

I once attended an accounting education technology conference at the University of North Texas where one feature of the conference were bus tickets that included seats to a Rangers night game.

A more exciting variation for airlines is seat pricing based upon the weight of each passenger at the time of check in ---
http://www.cs.trinity.edu/~rjensen/temp/TaxAirlineSeatCase.htm 
Samoa Airlines has already instigated this weigh in policy..

Humor for April 1-30, 2013

The 12 Funniest Google Searches Ever ---
http://www.businessinsider.com/best-google-search-results-ever-2013-4

The 40th President of the United States (Richard Prior) --- http://www.youtube.com/watch_popup?v=-_cdbByTeNE

Tom Lehrer’s Mathematically and Scientifically Inclined Singing and Songwriting, Animated ---
http://www.openculture.com/2013/04/tom_lehrer_math_animated.html

The Great Flydini (Steve Martin with Johnny Carson) --- http://rubytooth.com/link/45516

Unusual Brass Band (Humor) --- http://www.wimp.com/brassband/

Woman calls cops to report that kittens are having sex in her yard ---
http://now.msn.com/wisconsin-woman-calls-police-to-report-kittens-having-sex#scpshrtu

Bob Jensen probably blogs from his cottage bout as much as anybody in the world blogs from a personal residence. At last another blogger, Robert Moran, has shown Jensen how he can probably get a refund from the IRS rather than pay all those taxes he's been sending off to Uncle Sam.

"'That Seems About Right,' Says Soon-To-Be-Audited Man," TheOnion, April 2, 2013 ---
http://www.theonion.com/articles/that-seems-about-right-says-soontobeaudited-man,31898/?ref=auto

Forwarded by Gene and Joan

One day, shortly after joining the PGA tour in 1965, Lee Trevino, a professional golfer and married man, was at his home in Dallas , Texas mowing his front lawn, as he always did.

A lady driving by in a big, shiny Cadillac stopped in front of his house, lowered the window and asked, Excuse me, do you speak English?"

Lee responded, Yes Ma'am, I do."

The lady then asked, What do you charge to do yard work?

Lee said, "Well, the lady in this house lets me sleep with her."

The lady hurriedly put the car into gear and sped off.

Forwarded by Gene and Joan

Forwarded by Gene and Joan

PONDERISMS (some things to think about)

1- I used to eat a lot of natural foods until I learned that most people die of natural causes.

2- There are two kinds of pedestrians . . . The quick and the dead.

3- Life is sexually transmitted.

4- Healthy is merely the slowest possible rate at which one can die.

5- The only difference between a rut and a grave is the depth.

6- Health nuts are going to feel stupid someday, lying in hospitals dying of nothing.

7- Have you noticed since everyone has a cell phone these days no one talks about seeing UFOs like they used to?

8- Whenever I feel blue, I start breathing again.

9- All of us could take a lesson from the weather. It pays no attention to criticism.

10- In the 60's, people took acid to make the world weird. Now the world is weird and people take Prozac to make it normal.

11- How is it one careless match can start a forest fire, but it takes a whole box to start a campfire?

12- Who was the first person to look at a cow and say, 'I think I'll squeeze these dangly things and drink whatever comes out'? Hmmmmm, How about eggs ? . . .

13- If Jimmy cracks corn and no one cares, why is there a song about him?

14- Why does your OB-GYN leave the room when you get undressed if they are going to look up there anyway?

16- If corn oil is made from corn, and vegetable oil is made from vegetables, then what is baby oil made from?

17- Do illiterate people get the full effect of Alphabet Soup?

18- Does pushing the elevator button more than once make it arrive faster?

19- Why doesn't glue stick to the inside of the bottle?

Humor Between April 1-30, 2013 --- http://www.trinity.edu/rjensen/book13q2.htm#Humor04301

Humor Between March 1-31, 2013 --- http://www.trinity.edu/rjensen/book13q1.htm#Humor033113

Humor Between February 1-28, 2013 --- http://www.trinity.edu/rjensen/book13q1.htm#Humor022813

Humor Between January 1-31, 2013 --- http://www.trinity.edu/rjensen/book13q1.htm#Humor013113

Humor Between December 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q4.htm#Humor123112

Humor Between November 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q4.htm#Humor113012

Humor Between October 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q4.htm#Humor103112

Humor Between September 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q3.htm#Humor093012

Humor Between August 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q3.htm#Humor083112

Humor Between July 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q3.htm#Humor073112

Humor Between June 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q2.htm#Humor063012

Humor Between May 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q2.htm#Humor053112  

Humor Between April 1-30, 2012 --- http://www.trinity.edu/rjensen/book12q2.htm#Humor043012

Humor Between March 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q1.htm#Humor033112  

Humor Between February 1-29, 2012 --- http://www.trinity.edu/rjensen/book12q1.htm#Humor022912 

Humor Between January 1-31, 2012 --- http://www.trinity.edu/rjensen/book12q1.htm#Humor013112

And that's the way it was on April 30, 2013 with a little help from my friends.

Bob Jensen's gateway to millions of other blogs and social/professional networks ---
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Bob Jensen's Resume --- http://www.trinity.edu/rjensen/Resume.htm
 

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Concerns That Academic Accounting Research is Out of Touch With Reality

Accountancy, Tax, IFRS, XBRL, and Accounting History News Sites  --- http://www.trinity.edu/rjensen/AccountingNews.htm

Accounting Professors Who Blog --- http://www.trinity.edu/rjensen/ListservRoles.htm

Cool Search Engines That Are Not Google --- http://www.wired.com/epicenter/2009/06/coolsearchengines

Free (updated) Basic Accounting Textbook --- search for Hoyle at
http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks

CPA Examination --- http://en.wikipedia.org/wiki/Cpa_examination
Free CPA Examination Review Course Courtesy of Joe Hoyle --- http://cpareviewforfree.com/
 

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