Categories
Profession

AICPA, CIMA stakes claim to a global management accounting certification

One of the big reasons for merging Canada’s accounting professions is the global competition nipping at their (our?) heels. One such challenger, as highlighted in the current CA Magazine, is the Chartered Global Management Accountant certification, a product of the American Institute of Certified Public Accountants (AICPA) and Chartered Institute of Management Accountants (CIMA).

Cue Patrick Bateman: “Look at that subtle off-white coloring; the tasteful thickness of it… Oh my god, it even has a charter.”

I’m not sure why I should be worried about a brand new certification with no history and nascent prestige (to be charitable), but, … uh… hey, free magazine!

Accepting the argument that we need to meet this threat head-on by joining forces with our brethren, this might lead some to believe CMAs would be assuming the front lines in this battle, given their pedigree with management accounting. If we take these upstarts to be our challengers, this will no doubt impact the development of the merged curriculum and other requirements.

CA Magazine’s done some recon:

The hallmark of the CGMA designation is expertise in applying nonfinancial, qualitative information along with financial analysis to understand all aspects of business. According to a study done by the two institutes, this will be in increasing demand by international businesses that want integrated financial and nonfinancial information.

I think what they mean here is expertise is applying non-financial and/or qualitative information. As we all know, there are many important metrics in all businesses which are non-financial, but still quantitative. I think they’re taking that from this page which compares and contrasts financial accounting and the added value of management accounting. Where the former is concerned with the financial, the latter adds non-financial. Where the former focuses on quants, the latter includes qualitative information. (Conclusion: It’s all marketing!)

One thing is for certain, according to the pro-merger forces among us: War is coming.

(Yeah that’s right, I started this with an American Psycho reference and I’m ending it with a Game of Thrones reference. What of it?)

Categories
Accounting

FASB and AICPA seek small, private company input

The Financial Accounting Standards Board and the American Institute of CPAs have announced a joint project whose aim is to seek “constituent feedback on proposed enhancements to the FASB’s standard-setting procedures that would determine whether the Board should consider differences in accounting standards for private companies.”

This is the classic conundrum commonly known to those in the biz as “big GAAP little GAAP.” (Link via Jack Ciesielski’s AAO Weblog.)

What this refers to is GAAP for “big”, public companies and “little”, private companies. It’s about striking a balance between the cost of complying with accounting standards for small companies with its relative benefit to financial statement users.

In Canada, the profession has responded to the issue with something called “differential reporting”, which is a set of options that non-publicly accountable entities can choose to make their financial reporting cheaper, without sacrificing quality.

The most common options that I see in my work have to do with accounting for subsidiaries and other significantly-influenced investments, and income taxes. Ordinarily controlled entities are required to be consolidated in the financial statements with the parent company, but under differential reporting you can use easier methods such as the equity or cost method. They don’t provide the same level of disclosure or quality of information, but in smaller companies this isn’t the end of the world.

For income taxes, the taxes payable method is an option that can be used instead of the future income taxes method, allowing a company to forgo measuring their future income taxes, which are taxes that are likely to be assessed in future periods and arise from timing differences between financial accounting and tax laws.

In order to use differential reporting options, all the shareholders must agree to use it. As you can imagine, it is easiest and used most often in companies with owner-managers or only a handful of shareholders. It is useful because these types of shareholders are privy to information in the companies that ordinary shareholders in public companies simply aren’t, by virtue of their increased involvement in the daily operations.