IASB and FASB can’t get on same page

The international and US accounting standards bodies are both adjusting their mark-to-market rules in favour of politicians and bankers. FASB did it last month. IASB is working on it as quickly as they can. And yet, the two cannot agree on just how far they should bend over backward for the special interests.

After pressure from European Union finance ministers, the International Accounting Standards Board (IASB) has agreed to revise its fair value rule faster so it starts taking effect by year end.

[…]

“We desire to get to a common good answer with the IASB and we will make best efforts to do so, but some of the directions we are currently headed in are not to the liking of our board,” FASB chairman Bob Herz [said].

I think this boils down to the IASB wanting to delay reform of the impairment rules around financial instruments, and FASB believes any reform should include impairment changes right away. The IASB’s plans are to alter the rules around measurement and classification first before tackling the biggest issue with the standard.

I don’t think the rules need changing but if you’re going to do it anyway, you should include impairment. That being said, maybe the sluggish bureaucracy will allow cooler heads to prevail, at least for IFRS, while there’s still time.

How the risk of a pandemic might affect your company

A few days ago, probably through Twitter, I found an interesting site for auditors and other risk and compliance professionals called Compliance Week. Based in Boston, they publish a monthly magazine, a weekly email newsletter, and host several blogs and forums on the web.

What led me to the site was a link to a blog post on the risk posed by the swine flu virus, and the observation was made that companies are beginning to include this risk in their disclosures to regulators.

The outbreak is more likely to impact the disclosures of companies in certain industries, such as those in the retail, hospitality, travel, restaurant, or gaming sectors, as well as cruise ship, theme park, and mall operators… For some companies, the pandemic could potentially affect customer traffic, while for others it could affect their ability to staff their own locations or their supply chain.

One of the most interesting projects I’ve worked on since leaving public accounting was a risk assessment, because it encompassed not just the types of risks that I was comfortable with such as reporting and compliance risks, but also more operational and strategic risks. The risk posed by a pandemic wasn’t one that I had thought of at the time, which is likely because my business isn’t in any of those industries mentioned in the article.

footnoted.org recently posted on the topic as well, noting that Starwood Hotels & Resorts included pandemics and specifically swine flu in their first quarter 10-Q, and in doing so have joined other companies such as American Express and Expedia.

How would a pandemic affect your company’s business?

News the new way

Last night, protests that have been taking place in Toronto for the past few weeks at Queen’s Park and the US Consulate spilled onto the Gardiner Expressway, the elevated freeway that runs through downtown.

It was this event that brought home to me on a personal level the way the world is changing when it comes to how news is disseminated, and the role Twitter is playing in ushering in this new era.

Tamil protest on the GardinerMy condo looks over the freeway and I was able to watch the protests from above as they progressed through the evening. It started around 6:30pm and lasted until nearly midnight, when the last of the diehards finally called it a day.

When I wasn’t taking pictures of the crowd below, I was glued to my Twitter client of choice (for this week anyway), DestroyTwitter, reading the updates coming in from people watching the action from different vantage points.

All you needed to do follow the trend was search for #tamil or #tamilprotest. People weren’t just commenting on how crazy it all looked from above, but were also posting links to background information about the protests and the reason for them.

The most valuable aspect to me of this new way to experience current events is the connection I felt to everyone else in the city inconvenienced by the shutdown of the busy thoroughfare. There are a variety of points of view on the intelligence of the tactic itself, and everyone is sharing theirs via Twitter. It’s just such an incredible tool to connect people.

Follow my updates @neilmcintyre and connect with me!

Return to blogging

Greetings RSS subscribers who never got around to deleting me from their feed readers! It has been exactly one year since I announced my hiatus from blogging. I’m back!

A year ago I had broken free of the shackles of public accounting and taken on a new challenge in internal audit at a global building materials company. My adventures over the past year will provide the material for many blog posts in the future.

As well, the world was a much different place a year ago. Credit had already begun drying up, but things hadn’t quite gone completely sideways yet. Risky, greed-driven lending, opaque, incomprehensible derivatives, and the absence of my unique take on accounting have led to housing, credit and banking crises, plunging the entire world into recession.

The FASB is expertly highlighting its growing irrelevance by agreeing to change mark-to-market to mark-to-sorta-market-but-not-really-because-banks-don’t-like-having-to-write-down-their-worthless-derivatives-to-fair-value. Because letting powerful bankers and the supine politicians beholden to them determine accounting standards is a great idea.

In short, I’m returning to blogging during an interesting time.

Thanks for the memories

Dear readers,

It is with great reluctance that I announce the closing of this blog.

As of this Friday, May 9, 2008, I will leave public accounting to pursue new opportunities in the wide world of industry in internal audit.

I have met a lot of great people within the profession through this blog and it is those connections that I will take with me no matter where I go.

Thank you for your attention and comments – you are what made doing this worthwhile.

Neil McIntyre, CA
neil.mcintyre@gmail.com