| Cover
Story
Accountant:
rip van winkle, version 2.0
-- Easwar
SA
The
dynamics of change in business environment and technology has
had an impact on the profession of accounting. The profession
has witnessed a fall in the number of students opting for a
career in accounting. Traditional skills of accounting
professionals have lost their sheen and have acquired second
fiddle status to other fields like IT, finance strategy etc.
What are the reasons for the change? Can the profession
reacquire its preeminent position? What must be done to
salvage matters?
©
IUP. All Rights Reserved.
Corporate
Finance
Reliable
financial engineering
While
decades have rolled on and technology has improved by leaps
and bounds, what has remained unchanged for companies' is the
financial dilemma. They still grapple with the age old problem
of designing an optimal capital structure that best suits
their needs. This has posed considerable amount of challenge
to bean counters and CFOs, thus intensifying a need for a tool
that enables companies to create the right capital structure
to suit their circumstances. PricewaterhouseCoopers has
fashioned a model that can work out the precise point at which
there is an optimum mix of equity and debt. The article
provides a description of this new model.
©
CEO Magazine, PricewaterhouseCoopers, February, 2002.
Reprinted with permission.
Management
Accounting
Overview
of environmental management accounting
-- Dr.
Deborah Savage
Companies
have an important role in building a congenial society and it
goes without saying that they have to work towards this goal
actively and sincerely. Towards this objective, many tools and
concepts have been introduced to develop measures related to
environment whose effectiveness is linked with business
management. In this backdrop, a new concept called the
Environmental Management Accounting (EMA) is gaining momentum.
EMA is not merely an environmental management tool among many,
rather, it is a broad set of principles and approaches that
provides materials/energy flow and cost data critical to the
success of many other environmental management activities.
©
Environmental Management Accounting Research and Information
Center (EMARIC), www.emawebsite.org, May 2002. Reprinted with
permission.
Auditing
The
influence of technology on auditing
-- Eric
P Wallace
Auditing
has been influenced the most by information technology than
anything known to the auditing community. In this changing
scenario, the CPA profession needs to keep pace with
technological advances. The requirements on the part of an
auditor are not that rigorous. He first has to understand the
basics of the technology. If he employs advanced IT techniques
such as data mining, digit analysis and Benford testing in the
audit process, the job done will be more effective than
before. auditing in the new world.
©
Pennsylvania CPA Journal, a publication of the Pennsylvania
Institute of Certified Public Accountants, www.picpa.org,
Winter 2002. Reprinted with permission.
Governance
& Ethics
Who's
driving american firms?
-- Steven
Ferraro and Linnea B McCord
As
corporate frauds keep mounting, one party that is adversely
affected is the board of directors. Its role has been
transformed from being a spectator to evaluating and
monitoring the performance of management. But the recent fall
of big companies on account of corporate misdemeanors has put
the members of the board under critical scrutiny of the
regulatory bodies and the investing community. One cannot
blame them solely for the recent happenings but definitely
they cannot be absolved of their share of responsibility. The
confidence of investors will be restored only when the board
of directors diligently carries its duties.
©
Gradiazio Business Report, http://gbr.pepperdine.edu, Summer
2002. Reprinted with permission.
Independence
and the users of closely held companies' financial statements
-- Nicholas
J Mastracchio Jr.
Last
few years have seen the accounting profession inundated in
independence discussions particularly after the downfall of
many Fortune 500 companies. The focus of discussions has been
on large public companies; little concern was expressed on
issues facing closely held companies. The recently released
independence rules addressed the needs of users of public
company financial statements. Fear was expressed that these
rules could trickle down to smaller companies where they may
be ungainly or unsuitable. Definitely there is a need for the
development of self-regulating rules for closely held
companies. A survey on closely held companies was conducted in
this regard which revealed the need for independence standards
for closely held companies to be distinct from public
companies.
©
The CPA Journal, www.cpajournal.com, June 2002. Reprinted with
permission.
Financial
Reporting
Recognizable
Figures : Accounting for Revenue in Today's Business
Environment
Technology
stocks have taken a beating in capital markets across the
board after the dotcom bubble burst. In happier times each
company had its own way of treating the revenues generated,
but such flexibility has caused consternation among analysts
and investors about the way revenue has to be accounted. Today
numerous types of business transactions exist; new types of
transactions or new twists on old ones are appearing. This has
made various accounting bodies like FASB to work on the issue
of accounting for revenue. Revenue recognition practices will
become more and more company and customer specific as
businesses evolve and revenue arrangements become less
standardized.
©
Deloitte & Touche, www.deloitte.com. The article first
appeared in for the Record, July/August 2002, Volume 4.
Reprinted with permission.
Accounting
Abroad-How to Keep Managers and Auditors in Line
-- Ray
Ball
How
does one improve the quality of financial reporting in
countries switching from a planned economy to a market
economy? Conventional wisdom suggests that these countries
should simply adopt high-quality accounting standards;
high-quality reporting and disclosure. Recently the European
Parliament adopted this approach, which has not worked in
other countries like HongKong, Malaysia, Singapore etc. The
top priority for improvement should be to restore the rights
of affected shareholders and lenders to sue managers and
auditors for false and misleading reporting.
©
Capital Ideas, Spring 2002 (http://gsbwww.uchicago.edu/news/capideas).
Capital Ideas is a publication highlighting research from the
University of Chicago School of Business. Reprinted with
permission
Rush
for more disclosures
-- Ronald
Fink
Companies
are finding it difficult to gain the confidence of investors
and thereby raising the equity and debt capital after a series
of scams beginning with the downfall of Enron. WorldCom's
disclosure that it had overstated profit to the tune of $4 bn
has aggravated the evaporating investors' confidence. With
many prominent stock indices like S&P 500 and others
touching all time lows, it has turned out to be a testing time
for CFOs. The only way for CFOs now to clear all reservations
is by disclosing more and more accurate information. CFO has
conducted a survey in this regard and found out that companies
are disclosing more and more information to restore the
investor's trust.
©
CFO Magazine, www.cfo.com. August 2, 2002. Reprinted with
permission. Originally Published as "The Fear of All Sums
"
Speech
Remarks
before the national press club
-- Harvey
L Pitt
Investor
confidence in corporate America is in a deep gorge in the
aftermath of a succession of frauds unearthed since the fall
of the energy giant Enron. The SEC has taken up serious
reforms and is making all efforts to bring back the confidence
of the investors in American capital markets. Considering the
fact that these frauds are uncovering when Americans as a
whole have been exposed to capital markets in a big way, the
SEC's activity doesn't come as a surprise. There is some
activity, even from government which has plans to prosecute
executives who committed frauds with the possibility of
sending them to jail. The SEC has a long way to go in
combating the corporate crime. The SEC Chief in his speech
talks of actions taken by the regulatory body to prevent
corporate frauds.
©
www.sec.gov. Reprinted with permission.
Financial
accounting
What's
`normal' in derivatives accounting?
-- Ira
G Kawaller
Ever
since the FASB has come up with FAS 133, a lot of concern was
raised regarding the complexity of the standard. The board has
initiated actions to simplify the standard. This article talks
of the major issues behind this standard.
©
Financial Executive, www.fei.org, July/August 2002. Reprinted
with permission.
Accountant
Emissions
trading
-- John
Beech and Shannon Glenn
The
CA profession is an opportunity in the environmental sector as
there is a growing need for the `bean counters' in managing
the greenhouse gas emissions. Business will need assurance
professionals to help them legitimize the trade of emissions
reduction whereby a company sells an emission credit to an
organization that needs it. The question is whether
accountants are geared to meet the requirements of this
emerging market.
©
CAmagazine, August 2002. The magazine is published by the
Canadian Institute of Chartered Accountants, Toronto, Canada.
Reprinted with permission.
Word's
Worth
Understanding
financial shenanigans
-- Easwar
SA
The
books' Financial Shenanigans, The Financial Numbers Game,
Quality of Earnings appropriateness could not have been more
acutely felt than now. Given the Enron debacle that shocked
investors, accountants and regulators all over the world,
financial statements of companies are viewed with skepticism.
Most investors will learn a great deal about financial
reporting. Most importantly, readers will learn how to protect
themselves as investors. These books give an excellent
tutorial to help readers understand the nuances of financial
reporting and accounting.
©
IUP. All Rights Reserved.
|
