Today we’re going to provide some links to info on two topics: fair value accounting, and SEC’s recent settlement with a company and former exec over alleged fraud committed, in part, by use the modern day equivalent of ‘invisible ink.’
On the topic of fair value accounting – have you seen:
SEC Announces August 4 Roundtable on Performance of IFRS and U.S. GAAP During Subprime Crisis. (SEC press release July 28).
RiskMetrics Group to Hold Webcast on July 30: Proposed Accounting Changes on the Horizon--What Investors Can Expect (Risk Metrics press release July 28)
Accountants and the Crisis: Standard Setters – Troubled Waters (Peter Williams in Accountancy Age, July 25)
Keeping Tabs on the Financials – (Alexis Glick, FoxBusiness, July 25) Includes: “[Y]ou may recall, Jamie Dimon, the chairman and CEO of JPMorgan, discussed the accounting rule on his conference call last week…. he said that mark-to-market accounting is not conducive to a deal environment or would present problems/issues for him to do a deal. … Dimon is a very bright guy. He was telling the Fed, Treasury, FASB, the SEC and the FDIC, if you want me to buy or perhaps rescue another bank or broker dealer, then you better reconsider these FASB mark-to-market rules because they don’t work and they make my life miserable. What will happen? Time will tell … When bad things happen, regulators clamp down for obvious reasons but some of that clamping down in this case, could be to the detriment of the people who need the flexibility the most to stay afloat, raise capital and get deals done. A good story to keep a[n] eye on.”
Dimon to Wall Street: Don’t Blame Accounting Reg’s For Current Mess (Reuters article as published in Financial Week, July 8)
And, some of our recent blog posts: Cox, Geithner Tell Congress… (July 25); SEC Seeks Comment on Fair Value (FV) by July 23; Highlights of SEC July 9 FV Roundtable. (July 17); Fannie… Freddie.. and Accounting? (July 11); Deconstructing Fair Value (July 7); ... Uproar Over IIF Rec’s on Fair Value (May 29); Subprime, Credit Crisis Update (April 29)
Now you see it.. now you don’t…
SEC Charges Ann Arbor-Based Company and Former Executive in Accounting Fraud Scheme (SEC press release, July 22). “The SEC alleges that [the former exec] created false documentation to purportedly support the balances in the manipulated accounts and used "hidden rows" and "white font" functions in spreadsheets to conceal his false accounting entries.”
Don’t Be Fooled by Accountancy’s Invisible Ink (Adam Jones, FT.com Management Blog, July 23)
Ex-CFO Used Spreadsheets for Fraud (Stephen Taub, CFO.com, July 22)
Notice to Would-be Criminals: White Font Doesn't Hide Accounting Lies (Nathan Bomey, mLive.com, Everything Michigan, July 23)
What are some anti-fraud resources you can turn to on spreadsheet fraud and fraud generally?
The Committee of Sponsoring Organizations of the Treadway Commission (COSO). NOTE: COSO currently has an Exposure Draft (ED) out for public comment on “Monitoring Internal Control Systems,” comments are due Aug. 15. (See FEI summary.)
“New Guidelines Aim to Reduce Fraud: Leading professional associations: “Saying you ‘don’t want fraud’ is not enough!” (Press release issued July 8 on joint guidance issued by the Institute of Internal Auditors (IIA), Association of Certified Fraud Examiners (ACFE), and American Institute of CPAs.)
European Spreadsheet Risks Interest Group (EuSPRIG)
NYU School of Continuing and Professional Education: Certificate in Forensic Accounting
WhiteCollarFraud.com (website of Sam Antar, former CFO of Crazy Eddie)
WhiteCollarCrimeFighter (website edited by Peter Goldmann, member, ACFE, IIA, the High-Tech Crime Investigation Association (HTCIA) and other professional organizations.)
NOTE: Many of the major accounting firms have a forensic audit practice. There are also consulting firms like Kroll, FTI Consulting, and Navigant Consulting that offer forensic/investigative services.
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