August 19th, 2008 MJRamos
You might have heard that the FASB is proposing a revision to FAS 5 that would require greater disclosure of contingent liabilities. Not surprisingly, many companies oppose the change, arguing that the revision would not improve the reliability or transparency of financial information because of
the often-inflated claims of plaintiffs, the inherent unpredictability of litigation, and fears of giving plaintiffs’ attorneys too much information.
These arguments have merit and could very well carry the day. We’ve probably all had experience with an accounting pronouncement or two that, though well-intentioned, actually muddied the financial statements rather than make them clearer.
But according to an article in CFO magazine, some folks are now using IFRS as a rationale for opposing FASB pronouncements they would rather not comply with. My award for the most sanctimonious comment goes to John Merino, principal accounting officer at FedEx.
[W]e believe that implementing the proposed statement prior to completely harmonizing international accounting standards…could have a material adverse effect on the U.S. capital markets.
OMG, Batman!! The entire US capital structure lies in the balance if the FASB changes GAAP before 2013!! (Except of course, if the change means we disclose less information.)
Here’s the irony. Most of his comment letter is spot on, discussing some of the same objections noted above.
John, dude, why the overreach on IFRS? I’m thinking you get only two “IFRS made me do it, get out of jail free” cards. No need to burn one here–you’ve already got some solid arguments on your side.
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August 19th, 2008 MJRamos
Here are some highlights from Barack Obama’s economic plan.
- The top two income-tax brackets would return to their 1990s levels of 36% and 39.6% (including the exemption and deduction phase-outs). All other brackets would remain as they are today.
- The top capital-gains rate for families making more than $250,000 would return to 20% — the lowest rate that existed in the 1990s and the rate President Bush proposed in his 2001 tax cut. A 20% rate is almost a third lower than the rate President Reagan set in 1986.
- The tax rate on dividends would also be 20% for families making more than $250,000, rather than returning to the ordinary income rate. This rate would be 39% lower than the rate President Bush proposed in his 2001 tax cut and would be lower than all but five of the last 92 years we have been taxing dividends.
- The estate tax would be effectively repealed for 99.7% of estates, and retained at a 45% rate for estates valued at over $7 million per couple. This would cut the number of estates covered by the tax by 84% relative to 2000.
Read the full article here.
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August 6th, 2008 MJRamos
Do you ever read something, or go to a movie or listen to a song and say “Gee, I wish I’d written that?”
I kinda had that feeling this morning when I read Henry Kaufman’s commentary about regulating financial markets. Here’s the takeaway.
The more free-market oriented our economy, the greater its need for official financial supervision.
At first blush this sounds contradictory. How can you have a free-market economy with government having a hand in everything?
But note. He said government “supervision” not “regulation.” He’s not advocating more rules that cut down on what business can do. He’s arguing for the free market. But he also recognizes that free markets encourage risk taking, which requires ongoing regulatory overview. Government needs to understand what is going on with these big institutions because–let’s not kid ourselves–the taxpayers will bail them out if they get into trouble. (See Mac, Freddie; Mae, Fannie).
Which brings us to our profession. We are part of that information system needed to regulat–oops, I mean supervise–markets. That information system needs to be reliable and timely, and it needs to provide transparency into what is going on.
I guess none of this is new. But it’s always good to hear that we serve a good cause, we’re not just pushing around debits and credits. And it’s also good to hear someone talk about the benefits of regulatory oversight.
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August 6th, 2008 MJRamos
Some people just have way too much time on their hands. Here’s a YouTube video of someone playing the piano on two phones and a calculator. We live in a great time, don’t we?
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