August 06, 2009
Rock on Sir Tweedie!
"Tweedie Warns of 2011 Deadline for IFRS Choice"
Good luck with that Sir Tweedie!
With the change in administration, we now have an orientation towards an expansion of government influence like nothing we have seen before in the U.S.
This administration is seeking more power over private institutions and directing increased efforts toward enforcement. They will not have the time, interest or bandwidth to fight the battle over IFRS conversion.
The average US public company sees very few advantages to IFRS. They believe they have the best accounting standards in the world. The conversion costs along with litigation concerns will overwhelm this agenda. Even though Sir Tweedie is correct in stating that litigation is more dangerous under a prescriptive system than one based on principles!
See the excerpt below:
..."He said that firms were worried about lawsuits and joked that lawyers were more plentiful than mice in the U.S. However, he argued that it would be easier to defend professional judgment and principles-based standards in court. “If you ask U.S. litigation attorneys if this sort of system will actually increase litigation, the answer is no,” said Tweedie. “Which would you rather defend? I can defend a principle. Miss something on page 1,793, you’re finished. That’s a big difference.”...
This issue may be the one that finally isolates the US in a way that causes an even larger decrease in power in financial markets and world prestige. This administration has proven itself to be protectionist with its "Buy American" provisions in its latest stimulus bill.
This does not bode well for an informed world view and integration with the rest of the world, regarding accounting standards.
It is indeed a shame that the previous SEC chairman Christopher Cox was unable to expedite the IFRS discussion. He was pilloried by both parties, but he had the right ideas on IFRS and did the US markets a big service by allowing foreign private issuers to file financial statements in IFRS without reconciliation to US GAAP. This was smart. But that was that. No more activity on the topic since he was tossed out.
Ah yes Sir Tweedie, you are most certainly correct. The US should get on board with IFRS, but it will be a big surprise if that happens any time soon.
If your company is moving to IFRS and needs a cost effective solution, and wants to do it in a sensible and cost effective way, contact http://www.ifrspartner.com/ for more information on IFRS Partner® for companies beginning their conversion efforts. To find out more about events demonstrating these solutions, see http://ifrspartner.com/pages/events.htm. If your company has to certify internal controls under NI 52-109 or SOX 404 and needs the integration of IFRS and ICFR from one provider, see http://www.compliancepartner.ca/ for more information.
Good luck with that Sir Tweedie!
With the change in administration, we now have an orientation towards an expansion of government influence like nothing we have seen before in the U.S.
This administration is seeking more power over private institutions and directing increased efforts toward enforcement. They will not have the time, interest or bandwidth to fight the battle over IFRS conversion.
The average US public company sees very few advantages to IFRS. They believe they have the best accounting standards in the world. The conversion costs along with litigation concerns will overwhelm this agenda. Even though Sir Tweedie is correct in stating that litigation is more dangerous under a prescriptive system than one based on principles!
See the excerpt below:
..."He said that firms were worried about lawsuits and joked that lawyers were more plentiful than mice in the U.S. However, he argued that it would be easier to defend professional judgment and principles-based standards in court. “If you ask U.S. litigation attorneys if this sort of system will actually increase litigation, the answer is no,” said Tweedie. “Which would you rather defend? I can defend a principle. Miss something on page 1,793, you’re finished. That’s a big difference.”...
This issue may be the one that finally isolates the US in a way that causes an even larger decrease in power in financial markets and world prestige. This administration has proven itself to be protectionist with its "Buy American" provisions in its latest stimulus bill.
This does not bode well for an informed world view and integration with the rest of the world, regarding accounting standards.
It is indeed a shame that the previous SEC chairman Christopher Cox was unable to expedite the IFRS discussion. He was pilloried by both parties, but he had the right ideas on IFRS and did the US markets a big service by allowing foreign private issuers to file financial statements in IFRS without reconciliation to US GAAP. This was smart. But that was that. No more activity on the topic since he was tossed out.
Ah yes Sir Tweedie, you are most certainly correct. The US should get on board with IFRS, but it will be a big surprise if that happens any time soon.
If your company is moving to IFRS and needs a cost effective solution, and wants to do it in a sensible and cost effective way, contact http://www.ifrspartner.com/ for more information on IFRS Partner® for companies beginning their conversion efforts. To find out more about events demonstrating these solutions, see http://ifrspartner.com/pages/events.htm. If your company has to certify internal controls under NI 52-109 or SOX 404 and needs the integration of IFRS and ICFR from one provider, see http://www.compliancepartner.ca/ for more information.
August 04, 2009
IFRS Update: Extractive Industries Discussion Paper is Delayed
With everything that the IASB is trying to accomplish this year, it seems that some items had to fall off the table. The IASB published its July newsletter today and indicated that:
"The Board also decided to defer publication of the Extractive Activities discussion paper. The paper prepared for the IASB by the staff of national standard-setters will be made available on the IASB website but an invitation to comment on the paper will not be published until early in 2010. The Board also decided not to consider earnings per share until at least the second quarter of 2010. The Plan will be available soon under Current Projects.
Project Summaries are available on the IASB website."
This may be fortunate since the IFRS 6 standard needs a tremendous amount of work for completion. In view of Canadian filers, this means one less thing that will possibly change sooner rather than later. The oil and gas industry did get some relief earlier this month when IFRS 1 was modified to allow full cost for oil and gas assets. This practice is similar to Canadian GAAP now.
If your company is moving to IFRS and needs a cost effective solution, and wants to do it in a sensible and cost effective way, contact http://www.ifrspartner.com/ for more information on IFRS Partner® for companies beginning their conversion efforts. To find out more about events demonstrating these solutions, see http://ifrspartner.com/pages/events.htm. If your company has to certify internal controls under NI 52-109 or SOX 404 and needs the integration of IFRS and ICFR from one provider, see http://www.compliancepartner.ca/ for more information.
"The Board also decided to defer publication of the Extractive Activities discussion paper. The paper prepared for the IASB by the staff of national standard-setters will be made available on the IASB website but an invitation to comment on the paper will not be published until early in 2010. The Board also decided not to consider earnings per share until at least the second quarter of 2010. The Plan will be available soon under Current Projects.
Project Summaries are available on the IASB website."
This may be fortunate since the IFRS 6 standard needs a tremendous amount of work for completion. In view of Canadian filers, this means one less thing that will possibly change sooner rather than later. The oil and gas industry did get some relief earlier this month when IFRS 1 was modified to allow full cost for oil and gas assets. This practice is similar to Canadian GAAP now.
If your company is moving to IFRS and needs a cost effective solution, and wants to do it in a sensible and cost effective way, contact http://www.ifrspartner.com/ for more information on IFRS Partner® for companies beginning their conversion efforts. To find out more about events demonstrating these solutions, see http://ifrspartner.com/pages/events.htm. If your company has to certify internal controls under NI 52-109 or SOX 404 and needs the integration of IFRS and ICFR from one provider, see http://www.compliancepartner.ca/ for more information.
July 09, 2009
Sarbanes-Oxley for Banks
As reported by Courthouse News yesterday, the FDIC (Federal Deposit Insurance Corporation) will require banks over $1 billion in assets to held to the standards of Sarbanes-Oxley. This is quite an interesting development considering how the Act was so maligned and trashed for years BEFORE the meltdown.
But it is quite interesting that the banks were already extremely regulated and probably had strong internal controls. The real issue is going to be to look at the way risk is managed and how independent and active the boards and audit committees are.
Our numerous years of experience in this area in US and Canada has shown us that you can certify internal controls but if the board and audit committee are not active and independent, then all the controls at the lowest levels will not compensate for lack of an adequate Control Environment at the top.
Stay tuned for more regulations from the current administration. Let's just hope that the regulations are well thought out and not a pile on of new regulations without consideration of what is already in place. Further, let's be sure of the root of the real problems before regulations are enacted.
If your company has to comply with SOX 404 or NI 52-109, and wants to do it in a sensible and cost effective way, contact http://www.issuescentral.com/ for more information on Compliance Playbook® at http://www.issuescentral.com/. For Canadian based companies, see http://www.compliancepartner.ca/ for more information on Compliance Partner™. For IFRS Transition products, see http://www.ifrspartner.com/ from Issues Central.
But it is quite interesting that the banks were already extremely regulated and probably had strong internal controls. The real issue is going to be to look at the way risk is managed and how independent and active the boards and audit committees are.
Our numerous years of experience in this area in US and Canada has shown us that you can certify internal controls but if the board and audit committee are not active and independent, then all the controls at the lowest levels will not compensate for lack of an adequate Control Environment at the top.
Stay tuned for more regulations from the current administration. Let's just hope that the regulations are well thought out and not a pile on of new regulations without consideration of what is already in place. Further, let's be sure of the root of the real problems before regulations are enacted.
If your company has to comply with SOX 404 or NI 52-109, and wants to do it in a sensible and cost effective way, contact http://www.issuescentral.com/ for more information on Compliance Playbook® at http://www.issuescentral.com/. For Canadian based companies, see http://www.compliancepartner.ca/ for more information on Compliance Partner™. For IFRS Transition products, see http://www.ifrspartner.com/ from Issues Central.
June 04, 2009
FASB Chief Not Pleased About Proposed IFRS Changes
Financial Accounting Standards Board (FASB) Chief David Herz, has expressed displeasure about the proposed changes to IAS 39 Financial Instruments. A big concern to US standard setters is that US accounting standards are not subject to political pressure. Herz believes that recent proposed changes to IAS 39 are yielding to political pressures to make bank financial states appear more positive.
An article published by Reuters discusses these points.
Excerpts are here:
"The U.S. body said it won't be shoehorned into change.
"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, told a meeting of the Financial Crisis Advisory Group."
Does not look good for a new version of IAS 39 for this year. Maybe cooler heads will prevail on this topic. We will see how it shakes out.
But let's face it, many people wonder why the IASB cares so much about what the US thinks on IFRS when the current US administration has shown no interest in the IFRS Roadmap. They seem to have enforcement on their minds not convergence on accounting standards. The current administration has shown more of a leaning toward protectionism in its latest budgets and policies. So it would not be surprising to see little interest in trying to become more involved in world standards instead of a US centric view.
US companies would find IFRS less costly to utilize on an ongoing basis and less oriented towards rules and more principles based.
If your company is moving to IFRS and needs a cost effective solution, and wants to do it in a sensible and cost effective way, contact http://www.ifrspartner.com/ for more information on IFRS Partner® for companies beginning their conversion efforts. To find out more about events demonstrating these solutions, see http://ifrspartner.com/pages/events.htm
An article published by Reuters discusses these points.
Excerpts are here:
"The U.S. body said it won't be shoehorned into change.
"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, told a meeting of the Financial Crisis Advisory Group."
Does not look good for a new version of IAS 39 for this year. Maybe cooler heads will prevail on this topic. We will see how it shakes out.
But let's face it, many people wonder why the IASB cares so much about what the US thinks on IFRS when the current US administration has shown no interest in the IFRS Roadmap. They seem to have enforcement on their minds not convergence on accounting standards. The current administration has shown more of a leaning toward protectionism in its latest budgets and policies. So it would not be surprising to see little interest in trying to become more involved in world standards instead of a US centric view.
US companies would find IFRS less costly to utilize on an ongoing basis and less oriented towards rules and more principles based.
If your company is moving to IFRS and needs a cost effective solution, and wants to do it in a sensible and cost effective way, contact http://www.ifrspartner.com/ for more information on IFRS Partner® for companies beginning their conversion efforts. To find out more about events demonstrating these solutions, see http://ifrspartner.com/pages/events.htm
February 06, 2009
SOX 404 Delays Caused Increased Fraud in Smaller Public Companies
My experience as a Certified Internal Auditor and working with clients on SOX 404 and the Canadian equivalent NI 52-109 over the past six years, has made me a firm believer that fraud exists in most companies. It is just a matter of how big the fraud, how pervasive and whether it will be detected. A study that was released just today from the firm Lord & Benoit supports this conclusion.
An excerpt is here:
"Lord & Benoit, a Sarbanes-Oxley (SOX) research and consulting firm, just released The Tipping Point: Collision of Relaxed Regulation, Small Business and the Economy, a White Paper snapshot of the current economic, ethical and political environment for small business SOX compliance in the new Obama Administration. The Tipping Point provides a sobering post-mortem case study of a small, high technology public company that, according to a well-informed financial insider, "could have been saved if it had been complying with Section 404." The company, which received millions of dollars in investor capital during years of SOX deadline extensions, filed for bankruptcy and left a painful trail of financial destruction among investors, employees and suppliers."
The other interesting point the article makes is that fraud tends to increase in times of economic decline, for a lot of reasons. The new SEC Chair Susan Shapiro is a believer in the increased regulations of public companies and intends to push through SOX 404b this year. Makes sense since the original regulations were enacted in 2002. With all of the delays, many companies have not been taking the regulations seriously.
When I hear ( and I do frequently ) that these types of regulations are garbage and just busy work, this makes me think that the people uttering these remarks do not take the regulations and their implementation seriously. The regulations in fact try to have the issuers take responsibility for ethics as well as financial controls. So if ethics are "crap" then we are all in trouble.
In this prescriptive world of regulations, the business leaders need to take back the high ground and re-institute an ethical culture and stop the habit of complaining about regulations that are supposed to assist in high ethics and transparency. These business leaders need to truly embrace high ethical standards. This current cynical world of "nothing matters unless you get caught" is eroding our markets and the faith of many in business leaders. This lack of faith has a direct impact on faith in stock markets and share prices.
So let's get back to basics in business, honesty and integrity and it might be surprising how fraud will decrease and faith increases as does the share price.
If your company has to comply with SOX 404 or NI 52-109, and wants to do it in a sensible and cost effective way, contact http://www.issuescentral.com/ for more information on Compliance Playbook® for companies based outside of Canada at http://www.issuescentral.com/. For Canadian based companies, see http://www.compliancepartner.ca/ for more information on Compliance Partner™ from Thomson Reuters. For IFRS Transition products, see http://www.ifrspartner.com/ from Issues Central.
An excerpt is here:
"Lord & Benoit, a Sarbanes-Oxley (SOX) research and consulting firm, just released The Tipping Point: Collision of Relaxed Regulation, Small Business and the Economy, a White Paper snapshot of the current economic, ethical and political environment for small business SOX compliance in the new Obama Administration. The Tipping Point provides a sobering post-mortem case study of a small, high technology public company that, according to a well-informed financial insider, "could have been saved if it had been complying with Section 404." The company, which received millions of dollars in investor capital during years of SOX deadline extensions, filed for bankruptcy and left a painful trail of financial destruction among investors, employees and suppliers."
The other interesting point the article makes is that fraud tends to increase in times of economic decline, for a lot of reasons. The new SEC Chair Susan Shapiro is a believer in the increased regulations of public companies and intends to push through SOX 404b this year. Makes sense since the original regulations were enacted in 2002. With all of the delays, many companies have not been taking the regulations seriously.
When I hear ( and I do frequently ) that these types of regulations are garbage and just busy work, this makes me think that the people uttering these remarks do not take the regulations and their implementation seriously. The regulations in fact try to have the issuers take responsibility for ethics as well as financial controls. So if ethics are "crap" then we are all in trouble.
In this prescriptive world of regulations, the business leaders need to take back the high ground and re-institute an ethical culture and stop the habit of complaining about regulations that are supposed to assist in high ethics and transparency. These business leaders need to truly embrace high ethical standards. This current cynical world of "nothing matters unless you get caught" is eroding our markets and the faith of many in business leaders. This lack of faith has a direct impact on faith in stock markets and share prices.
So let's get back to basics in business, honesty and integrity and it might be surprising how fraud will decrease and faith increases as does the share price.
If your company has to comply with SOX 404 or NI 52-109, and wants to do it in a sensible and cost effective way, contact http://www.issuescentral.com/ for more information on Compliance Playbook® for companies based outside of Canada at http://www.issuescentral.com/. For Canadian based companies, see http://www.compliancepartner.ca/ for more information on Compliance Partner™ from Thomson Reuters. For IFRS Transition products, see http://www.ifrspartner.com/ from Issues Central.
