We told you on February 8 that SEC Chairman Christopher Cox announced that day: “In 2008, the Division of Corporation Finance and the Office of the Chief Accountant… will formally propose to the Commission an updated "roadmap" that lays out a schedule, and appropriate milestones on which the schedule will be conditioned, for continuing the progress that the United States is making in moving to accept IFRS in this country.”
What’s new with the SEC’s roadmap in which the commission will consider permitting – or requiring – U.S. companies to file in IFRS? The most recent remarks posted on the SEC website touching on this topic – a speech by Commissioner Paul S. Atkins on March 3, 2008 to the Institute of International Bankers - indicate the SEC is still in the process of considering comments submitted on its August, 2007 Concept Release on this subject. The comments received, said Atkins, “will be helpful as we further consider the path of convergence between IFRS and GAAP.”
Meanwhile, two magazines have excellent cover stories on IFRS this month. The first is “A Step Towards Convergence in M&A Accounting,” the cover story in the April edition of Financial Executive Magazine, published by FEI. The article, written by Cheryl Graziano, VP of Operations, Financial Executives Research Foundation, and Ellen Heffes, Executive Editor, Financial Executive Magazine, provides insights from interviews with Suzanne Bielstein of the FASB, Pascal Desroches of Time Warner Inc., Mick Homan of Procter & Gamble, Richard Dinkel of Koch Industries, Inc., and Alan Texiera of the IASB, regarding application of the new business combinations rules issued by the FASB and IASB, the first new standards issued as a joint project of the two boards.
There is also an excellent article, “Goodbye GAAP” by Sarah Johnson, the cover story in the April 1 issue of CFO Magazine.
“Experts at the Big Four accounting firms say a Securities and Exchange Commission mandate for all U.S. publicly traded companies to use IFRS is inevitable,” reports Johnson. As to timing, she says, “The SEC … plan[s] to release a road map in late spring for transitioning U.S. public companies to the international standards, but it has not yet said whether adopting IFRS will be mandatory.” She adds, “[M]any SEC watchers expect the agency to eventually scrap GAAP.”
Johnson also provides interesting insights from FASB Chairman Robert Herz, PCAOB Board Member Charles Niemeier, FEI Vice President of Technical Activities Christine DiFabio, and others on issues such as the extent to which IFRS and U.S. GAAP are converging to one or the other set of standards, and issues for smaller companies contemplating convergence. The readers’ comments posted on the article are also interesting.
(On the subject of interesting reader comments – see NYT Floyd Norris’ April 4 blog post, “A Search For Scapegoats,” in which he counters arguments that the credit crisis was caused by “the shorts and the bean counters;” equally interesting are the comments readers filed in response to his post.)
As the pace of convergence continues, the IASB recently announced the appointment of two new members to the recently enlarged International Financial Reporting Interpretations Committee (IFRIC): Peggy Smyth, VP and Controller, United Technologies Corp. (Smyth also serves as a member of FEI’s Committee on Corporate Reporting), and Scott Taub, Director, Financial Reporting Advisors (Taub was formerly Acting Chief Accountant and Deputy Chief Accountant at the SEC).
Jeff Keeler, CFO of DuPont told CFO.com’s Johnson, when it comes to IFRS reporting by U.S. companies (particularly SEC registrants): “If I'm reading the tea leaves right, it's not a question of if but when.”
See also Rick Telberg's CPA Trendlines blog post, "Sir David Tweedie Winning the War for IFRS," citing in turn an indepth article on IASB Chairman Tweedie which appeared in Financial Director. Telberg says of Tweedie: "He turned UK accounting standards on their head and got Europe to adopt IFRS. Now Tweedie is ready to bag the big prize: America."
All this leads to FEI’s June 5 Global Financial Reporting Convergence Conference: “The World Is Moving To IFRS: Are You?” Here is an updated agenda (as of April 7, 2008) including new speakers added. The conference will be held at The Coleman Center in New York City. A highlight of the Conference will be a keynote by SEC Corp Fin Director John White, and other speakers as shown on the agenda include senior staff of the IASB and FASB, as well as leading financial executives, auditors, and other experts. Register soon at www.financialexecutives.org/ifrs, space is limited! The conference is exclusively sponsored by BNA Tax & Accounting.
By the way…I’d normally stay up till midnight so this post would be recorded ‘as of’ Monday April 7 (I’ve been known to set my alarm to wake up around midnight just to post the blog so it doesn’t appear to be ‘yesterday’s news’) but I just got done reading the front page story in Sunday’s NYT by Matt Richtel, “In Web World of 24/7 Stress, Writers Blog Till They Drop,” so forgive me if I post a couple hours before midnight. (Fellow bloggers, what say ye on the topic of 24/7 blogging stress? Or, for all readers –on the expanded topic of 24/7 wireless mobile email access (see, e.g., “Survey Shows Americans Increasingly Addicted to Mobile Email.”) Feel free to post a comment or email me. And, if you received this blog post from ‘a friend’ and would like to receive our blog real-time, enter your email address here.
Sunday, April 6, 2008
Thursday, April 3, 2008
FASB Votes To Remove QSPE Concept From FAS 140, FIN 46R
Yesterday (April 2, 2008), FASB voted to remove the Qualified Special Purpose Entity (QSPE) concept (used for some securitizations) from FAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and to remove the related scope exception from FIN 46R, Consolidation of Variable Interest Entities (VIEs). In addition to removing the QSPE concept, the board also approved amendments to the derecognition criteria in paragraph 9 of FAS 140 (changes shown in redline form on pages 1-2 of the board handout), and agreed to provide guidance on the ‘unit of account’ as relates to when a ‘portion’ of an asset can be derecognized - by requiring essentially the same characteristics as proposed in FASB’s 2005 Exposure Draft of proposed amendments to FAS 140 with respect to the definition of ‘participating interest,’ (definition appears on pages 3-4 of the board handout). FASB's project page currently states an amended Exposure Draft (ED) is expected to be released in the second quarter of 2008; in my estimation, the proposed changes decided yesterday are likely to be included in that ED or in a separate proposal document.
Brief Background
The QSPE concept specified in FAS 140 had been criticized, particularly in light of recent market turmoil tied largely to origination (and related issues involving securitization) of subprime mortgages. To obtain ‘sale treatment’ or off-balance sheet treatment for assets transferred or sold to a QSPE, (and for asset transfers generally) the transferor (e.g. a bank or other originator of mortgages) must give up control over the assets, otherwise the assets would have to remain on the transferors balance sheet (and gain on sale would be limited). The QSPE concept as defined in FAS 140 provided a means to demonstrate control was given up by the transferor, however, the restrictions specified in FAS 140 prohibiting a QSPE from managing the underlying assets, unless pre-specified in the original documents of the securitization trust, or agreed to subsequently by a majority of the investors in the trust, was viewed by some as threatening the ability of lenders and servicers to modify the terms of mortgages to help borrowers avoid foreclosure in the recent credit crunch.
Expedited Action In Light Of Credit Crunch Responds To SEC, PWG Request
FASB has had a longer term project to amend FAS 140, dating back to its 2005 Exposure Draft. The expedited nature of dealing with the QSPE issue as a short-term project was in response to a request from the SEC that FASB address this issue by year-end (noted on page 4 of this letter to the AICPA and FEI), and in response to a recommendation of the President’s Working Group (PWG) - in its March 13 report - calling on ‘authorities’ to encourage FASB to ‘evaluate the role of accounting standards in the current market turmoil… includ[ing] an assessment of the need for further modifications to accounting standards related to consolidation and securitization.’
FASB Project Manager Pat Donoghue told the FASB board that requests had come from ‘preparers and others’ to deal with the QSPE issue expeditiously. She explained, “We have significant issues in practice; constituents cannot consistently apply the guidance to products we have today.”
FASB board member Don Young asked if the objective of the short-term project on QSPEs was solely to provide preparer relief, or if it would improve financial reporting for investors. FASB staff responded there are two objectives to the project, one is short-term to respond to issues in practice that have been exacerbated by the current market turmoil and developments in securitization since FAS 140 was written, but the longer-term objective of broader amendments to improve FAS 140 remained.
FASB staff also recommended that their long-term project to amend FAS 140 be tackled as a joint project with the IASB, and could include a broad look at derecognition (e.g, off-balance sheet or ‘sale’ treatment of securitizations and asset transfers.) Among the issues FASB previously deliberated at board meetings last year was whether to move to a ‘linked presentation’ model, aimed at providing more transparency to investors by linking assets transferred with a related liability, so investors could determine for themselves the implications of net vs. gross treatment, vs. the current model allowing off-balance sheet treatment.
In voting to support the FASB staff’s proposal to remove the QSPE concept from the accounting literature, a number of board members mentioned there were longstanding difficulties with the QSPE concept that were exacerbated in the credit crunch relating in particular to subprime mortgage securitizations.
“For five years now we’ve struggled with application of [FAS] 140 [and] the fundamental question related to servicer discretion,” said board member Larry Smith. “We said, it’s almost impossible to structure a vehicle with the objectives the board had in mind when they created QSPEs: that is, an entity that has no decision making whatsoever relative to the run-out of these assets.”
He added, “I think the staff is appropriate in recommending that we do away with QSPE’s; there are no assets short of US treasury assets that somebody doesn’t make decisions over during the life of [those] assets.”
“We have a concept that really isn’t working, and we need to come up with some other way to help investors evaluate what these transactions are,” said Smith. “At the end of the day, I don’t think the current application of 140 is what the board that approved 140 had in mind, therefore I think we should just stop pretending, and eliminate QSPE’s from our literature, and rely on other aspects of the consolidation model to give [us an] answer that is appropriate.”
Recap of Accounting Developments Relating to Subprime Securitizations
Last summer we started covering developments in the subprime crisis, particularly as relate to accounting issues, including governmental requests for clarification of the accounting rules for securitization as they may impact lenders, servicers, investors and others abilities and desire to modify the terms of mortgages that are at risk of going into default. See, e.g. “Those Curious QSPEs,” “FASB … To ‘Get Out of the Way’ on Debate Over Subprime Accounting,” “Schumer Asks Big Four to Share SEC Guidance on Loan Modifications,” and “Policy Paper of Multi-State Task Force of Ten State Attorneys General Calls for Modification of Subprime Mortgages.”
Among the items noted was a letter from SEC Chairman Christopher Cox to House Financial Services Chairman Barney Frank on July 24, 2007. Although the letter concluded that loan modifications when default is reasonably foreseeable “would not result in a requirement for entities to account for those securitized assets on their balance sheets,” the letter also included a detailed attachment from the Chief Accountant to the SEC Chairman, which included a discussion about permissible activities of QSPEs as set forth in FAS 140, which said, “Many mortgage loans are securitized using QSPE structures. The FASB intended for QSPEs to be entities that would not be actively managed and instead would be on ‘auto pilot.’”
As we noted in this blog last year, in trying to interpret the guidance on QSPEs set forth in FAS 140 and expressly described in the detailed attachment to SEC’s July 24, 2007 questions were raised in some minds as to whether the general guidance in the cover letter from SEC Chairman Cox to Rep. Frank was ‘unequivocal,’ as it had been so described in an August 23, 2007 letter from Sen. Charles Schumer to the CEOs of the ‘Big Four’ audit firms, as cited in this Alert published August 24, 2007 by the Center for Audit Quality (CAQ).
Further guidance appeared in an SEC letter dated Jan. 8, 2008 addressed to the AICPA and FEI, in which the SEC Chief Accountant said, “The Office of the Chief Accountant(“OCA") has been asked by preparers, auditors, ASF [American Securitization Forum], the U.S. Department of the Treasury, and others whether modifications of Segment 2 subprime ARM loans that occur pursuant to the ASF Framework would result in a change in the status of a transferee as a qualifying special-purpose-entity ("QSPE") under paragraph 55 of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("Statement 140").”
“OCA has read the ASF framework and has concluded that it will not object to continued status as a QSPE if Segment 2 subprime ARM loans are modified pursuant to the specific screening criteria in the ASF Framework,” stated the SEC’s January 8 letter to the AICPA and FEI.
“Additionally, given the unique nature of the contemplated modifications and other loss mitigation activities that are recommended in the ASF Framework, OCA expects registrants to provide sufficient disclosures in filings with the Commission regarding the impact that the ASF Framework has had on QSPEs that hold subprime ARM loans.”
The SEC also stated in its January 8 letter that its “represent[t] an interim step in addressing one practice issue that exists in the application of paragraphs 9(b) and 35-55 of Statement 140,” and that, “Concurrent with the issuance of this letter, OCA has requested the FASB to immediately address the issues that have arisen in the application of the QSPE guidance in Statement 140. OCA has requested that the FASB complete its project addressing the guidance in paragraphs 9(b) and 35-55 of Statement 140 in order to be effective no later than years beginning after December 31, 2008.”
Herz on Hindsight and Foresight
Rolling forward to yesterday’s board meeting, FASB Chairman Robert Herz observed, “I think the [QSPE] concept has been stretched and stretched and stretched and stretched and stretched over the years, and the crescendo has been with the latest round of very problematic assets that were securitized with this approach.”
He noted that although there are some very simple structures that would qualify for QSPE treatment, “the majority of what’s been an issue have been much larger things with assets that turned out to be quite problematic and require a lot of attention.”
“Maybe with the benefit of hindsight we understand that, although I think even with the benefit of foresight it could have been maybe understood.”
Herz’ observation about hindsight and foresight is interesting when read in conjunction with paragraphs 190 and 191 in the Basis for Conclusions section of FAS 140.
Para. 190 noted that constituents told FASB they believed QSPEs and their servicers should be able to exercise a “commercially reasonable and customary amount of discretion in deciding whether to dispose of assets in the specified circumstances,” and that “allowing a QSPE only to have provisions that require disposal without choice raises the risks of forcing a disposal at a bad time or that allowing no discretion conflicts with the fiduciary duties of the SPE’s trustee or servicer.”
“The Board acknowledged the concerns that underlie those views but did not change that provision,” continues para. 190, “reasoning that a qualifying SPE with that flexibility should not be considered to be a passive conduit through which its BIHs [Beneficial Interest Holders] own portions of its assets, as opposed to owning shares or obligations in an ordinary business enterprise.
Para. 191 noted, “The Board considered but rejected a general condition that would permit a qualifying SPE to sell assets as long as the sales were made “to avoid losses.” Such a condition would have allowed an SPE to have powers to sell as long as the primary objective was not to realize gains or maximize return, a concept introduced in Topic D-66. The Board rejected it because it would have given the trustee, servicer, or transferor considerable discretion in choosing whether or not the SPE should sell if a loss was threatened. Such discretion is more in keeping with being an ordinary business that manages its own assets than with being a passive repository of assets on behalf of others.”
It is always easier to look back with 20-20 hindsight, but it is interesting to observe the emphasis noted in FAS 140 as cited above on precluding QSPEs from operating like an ‘ordinary business,’ including the ability to use discretion and manage assets to avoid or minimize losses.
In light of the current credit crisis, it is encouraging to see the FASB responding rapidly to concerns that have been raised.
Companies, auditors and others will need to holistically examine the package of changes being proposed to remove the QSPE concept and the related amendments to paragraph 9 of FAS 140, to determine the net effect on how they account for securitization transactions, as well as the impact on how they are structured and any accounting ramifications from modification of underlying assets.
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Brief Background
The QSPE concept specified in FAS 140 had been criticized, particularly in light of recent market turmoil tied largely to origination (and related issues involving securitization) of subprime mortgages. To obtain ‘sale treatment’ or off-balance sheet treatment for assets transferred or sold to a QSPE, (and for asset transfers generally) the transferor (e.g. a bank or other originator of mortgages) must give up control over the assets, otherwise the assets would have to remain on the transferors balance sheet (and gain on sale would be limited). The QSPE concept as defined in FAS 140 provided a means to demonstrate control was given up by the transferor, however, the restrictions specified in FAS 140 prohibiting a QSPE from managing the underlying assets, unless pre-specified in the original documents of the securitization trust, or agreed to subsequently by a majority of the investors in the trust, was viewed by some as threatening the ability of lenders and servicers to modify the terms of mortgages to help borrowers avoid foreclosure in the recent credit crunch.
Expedited Action In Light Of Credit Crunch Responds To SEC, PWG Request
FASB has had a longer term project to amend FAS 140, dating back to its 2005 Exposure Draft. The expedited nature of dealing with the QSPE issue as a short-term project was in response to a request from the SEC that FASB address this issue by year-end (noted on page 4 of this letter to the AICPA and FEI), and in response to a recommendation of the President’s Working Group (PWG) - in its March 13 report - calling on ‘authorities’ to encourage FASB to ‘evaluate the role of accounting standards in the current market turmoil… includ[ing] an assessment of the need for further modifications to accounting standards related to consolidation and securitization.’
FASB Project Manager Pat Donoghue told the FASB board that requests had come from ‘preparers and others’ to deal with the QSPE issue expeditiously. She explained, “We have significant issues in practice; constituents cannot consistently apply the guidance to products we have today.”
FASB board member Don Young asked if the objective of the short-term project on QSPEs was solely to provide preparer relief, or if it would improve financial reporting for investors. FASB staff responded there are two objectives to the project, one is short-term to respond to issues in practice that have been exacerbated by the current market turmoil and developments in securitization since FAS 140 was written, but the longer-term objective of broader amendments to improve FAS 140 remained.
FASB staff also recommended that their long-term project to amend FAS 140 be tackled as a joint project with the IASB, and could include a broad look at derecognition (e.g, off-balance sheet or ‘sale’ treatment of securitizations and asset transfers.) Among the issues FASB previously deliberated at board meetings last year was whether to move to a ‘linked presentation’ model, aimed at providing more transparency to investors by linking assets transferred with a related liability, so investors could determine for themselves the implications of net vs. gross treatment, vs. the current model allowing off-balance sheet treatment.
In voting to support the FASB staff’s proposal to remove the QSPE concept from the accounting literature, a number of board members mentioned there were longstanding difficulties with the QSPE concept that were exacerbated in the credit crunch relating in particular to subprime mortgage securitizations.
“For five years now we’ve struggled with application of [FAS] 140 [and] the fundamental question related to servicer discretion,” said board member Larry Smith. “We said, it’s almost impossible to structure a vehicle with the objectives the board had in mind when they created QSPEs: that is, an entity that has no decision making whatsoever relative to the run-out of these assets.”
He added, “I think the staff is appropriate in recommending that we do away with QSPE’s; there are no assets short of US treasury assets that somebody doesn’t make decisions over during the life of [those] assets.”
“We have a concept that really isn’t working, and we need to come up with some other way to help investors evaluate what these transactions are,” said Smith. “At the end of the day, I don’t think the current application of 140 is what the board that approved 140 had in mind, therefore I think we should just stop pretending, and eliminate QSPE’s from our literature, and rely on other aspects of the consolidation model to give [us an] answer that is appropriate.”
Recap of Accounting Developments Relating to Subprime Securitizations
Last summer we started covering developments in the subprime crisis, particularly as relate to accounting issues, including governmental requests for clarification of the accounting rules for securitization as they may impact lenders, servicers, investors and others abilities and desire to modify the terms of mortgages that are at risk of going into default. See, e.g. “Those Curious QSPEs,” “FASB … To ‘Get Out of the Way’ on Debate Over Subprime Accounting,” “Schumer Asks Big Four to Share SEC Guidance on Loan Modifications,” and “Policy Paper of Multi-State Task Force of Ten State Attorneys General Calls for Modification of Subprime Mortgages.”
Among the items noted was a letter from SEC Chairman Christopher Cox to House Financial Services Chairman Barney Frank on July 24, 2007. Although the letter concluded that loan modifications when default is reasonably foreseeable “would not result in a requirement for entities to account for those securitized assets on their balance sheets,” the letter also included a detailed attachment from the Chief Accountant to the SEC Chairman, which included a discussion about permissible activities of QSPEs as set forth in FAS 140, which said, “Many mortgage loans are securitized using QSPE structures. The FASB intended for QSPEs to be entities that would not be actively managed and instead would be on ‘auto pilot.’”
As we noted in this blog last year, in trying to interpret the guidance on QSPEs set forth in FAS 140 and expressly described in the detailed attachment to SEC’s July 24, 2007 questions were raised in some minds as to whether the general guidance in the cover letter from SEC Chairman Cox to Rep. Frank was ‘unequivocal,’ as it had been so described in an August 23, 2007 letter from Sen. Charles Schumer to the CEOs of the ‘Big Four’ audit firms, as cited in this Alert published August 24, 2007 by the Center for Audit Quality (CAQ).
Further guidance appeared in an SEC letter dated Jan. 8, 2008 addressed to the AICPA and FEI, in which the SEC Chief Accountant said, “The Office of the Chief Accountant(“OCA") has been asked by preparers, auditors, ASF [American Securitization Forum], the U.S. Department of the Treasury, and others whether modifications of Segment 2 subprime ARM loans that occur pursuant to the ASF Framework would result in a change in the status of a transferee as a qualifying special-purpose-entity ("QSPE") under paragraph 55 of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities ("Statement 140").”
“OCA has read the ASF framework and has concluded that it will not object to continued status as a QSPE if Segment 2 subprime ARM loans are modified pursuant to the specific screening criteria in the ASF Framework,” stated the SEC’s January 8 letter to the AICPA and FEI.
“Additionally, given the unique nature of the contemplated modifications and other loss mitigation activities that are recommended in the ASF Framework, OCA expects registrants to provide sufficient disclosures in filings with the Commission regarding the impact that the ASF Framework has had on QSPEs that hold subprime ARM loans.”
The SEC also stated in its January 8 letter that its “represent[t] an interim step in addressing one practice issue that exists in the application of paragraphs 9(b) and 35-55 of Statement 140,” and that, “Concurrent with the issuance of this letter, OCA has requested the FASB to immediately address the issues that have arisen in the application of the QSPE guidance in Statement 140. OCA has requested that the FASB complete its project addressing the guidance in paragraphs 9(b) and 35-55 of Statement 140 in order to be effective no later than years beginning after December 31, 2008.”
Herz on Hindsight and Foresight
Rolling forward to yesterday’s board meeting, FASB Chairman Robert Herz observed, “I think the [QSPE] concept has been stretched and stretched and stretched and stretched and stretched over the years, and the crescendo has been with the latest round of very problematic assets that were securitized with this approach.”
He noted that although there are some very simple structures that would qualify for QSPE treatment, “the majority of what’s been an issue have been much larger things with assets that turned out to be quite problematic and require a lot of attention.”
“Maybe with the benefit of hindsight we understand that, although I think even with the benefit of foresight it could have been maybe understood.”
Herz’ observation about hindsight and foresight is interesting when read in conjunction with paragraphs 190 and 191 in the Basis for Conclusions section of FAS 140.
Para. 190 noted that constituents told FASB they believed QSPEs and their servicers should be able to exercise a “commercially reasonable and customary amount of discretion in deciding whether to dispose of assets in the specified circumstances,” and that “allowing a QSPE only to have provisions that require disposal without choice raises the risks of forcing a disposal at a bad time or that allowing no discretion conflicts with the fiduciary duties of the SPE’s trustee or servicer.”
“The Board acknowledged the concerns that underlie those views but did not change that provision,” continues para. 190, “reasoning that a qualifying SPE with that flexibility should not be considered to be a passive conduit through which its BIHs [Beneficial Interest Holders] own portions of its assets, as opposed to owning shares or obligations in an ordinary business enterprise.
Para. 191 noted, “The Board considered but rejected a general condition that would permit a qualifying SPE to sell assets as long as the sales were made “to avoid losses.” Such a condition would have allowed an SPE to have powers to sell as long as the primary objective was not to realize gains or maximize return, a concept introduced in Topic D-66. The Board rejected it because it would have given the trustee, servicer, or transferor considerable discretion in choosing whether or not the SPE should sell if a loss was threatened. Such discretion is more in keeping with being an ordinary business that manages its own assets than with being a passive repository of assets on behalf of others.”
It is always easier to look back with 20-20 hindsight, but it is interesting to observe the emphasis noted in FAS 140 as cited above on precluding QSPEs from operating like an ‘ordinary business,’ including the ability to use discretion and manage assets to avoid or minimize losses.
In light of the current credit crisis, it is encouraging to see the FASB responding rapidly to concerns that have been raised.
Companies, auditors and others will need to holistically examine the package of changes being proposed to remove the QSPE concept and the related amendments to paragraph 9 of FAS 140, to determine the net effect on how they account for securitization transactions, as well as the impact on how they are structured and any accounting ramifications from modification of underlying assets.
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Tuesday, April 1, 2008
Treasury Fails To File Blueprint; CPA Island Coming to TV; Dunder Mifflin CFO Joins FEI
OK, you’re right, the U.S. Treasury Department is not required to file its Blueprint for a Modernized Regulatory Structure with the U.S. Patent and Trademark Office, CPA Island is not a new reality show like CBS’s “Survivor" (although some CPAs may find it an apt metaphor), and Dunder Mifflin CFO David Wallace of NBC’s “The Office,” has not joined Financial Executives International (FEI) (at least, not to our knowledge). This is just a little April Fools humor for our readers, relating to topics we cover the rest of the year in a more serious vein.
We figured, if SEC Chairman Christopher Cox can promote a little April Fools humor, (as reported by the Financial Times last year in, “The SEC’s Prank Press Release,” and “SEC's April Fuhrst Attempts Lighten Regulation) it’s worth a try! Among those quoted in the SEC’s prank press release last year were SEC spokeswoman April Fuhrst, Deputy Chief Economist Anita Moore-Profit, Ass't Chief Information Officer Edgar Philing, Assoc. Deputy Director of the Division of Corporation Finance Rita Tennkae, and my personal favorite, Ass't Deputy Director of the Enforcement Division Sue Offen. In honor of April Fools, you may want to check out some of the “Top 100 April Fools Day Hoaxes of All Time,” published by the Museum of Hoaxes. See, e.g., #4, “Taco Liberty Bell,” and #67, “Y2K Solved.”
On a more serious note regarding the topics listed in our subject line above:
Treasury Blueprint: see our coverage yesterday; and for reactions to the plan, see e.g.:
“Frank Statement on Paulson Plan,” in which House Financial Services Committee Chair Barney Frank which says, in part, “We have not yet analyzed the proposals in detail, and I have disagreements with some specifics… But given the fact that is a contribution to a profound national discussion that cannot be concluded in the months before the election, Secretary Paulson has performed an important service. By rejecting the argument for the status quo; by making it clear that new regulation done properly enhances the function of the market rather than detracts from it; and by explicitly including consumer protection among the core functions of the system he proposes, he has narrowed, albeit by no means removed, the differences between his position and that of many Democrats.”
“Dodd Statement on Treasury’s Blueprint for Regulatory Reform,” in which Senate Banking Committee Chair Christopher Dodd says, in part: “The President and his advisors recently put up $30 billion of taxpayer funds to help one company on Wall Street. ... I intend to investigate the deal at a Banking Committee hearing that I will chair on Thursday.” He added, “[I]f the President and his advisors can find $30 billion to help one company on Wall Street, they can surely find a way to help millions of Americans facing higher mortgage payments and falling home prices…This regulatory Blueprint will do little, if anything, for those Americans...on the one hand, it would reduce the fragmentation and balkanization that has often encouraged regulators to compete with each other by weakening rather than strengthening regulation. On the other hand, it would create weaker standards to protect investors and consumers.... We should be guided by a couple of basic, common-sense principles. First, where we can simplify and rationalize regulation, we should... Second, we must restore the trust and confidence of investors and consumers. That trust has been shattered -- not because regulators did too much, but because they did too little.
“Chamber Welcomes Call for Financial Regulatory Modernization and Simplification - Treasury Blueprint Advances Needed Debate,” press release issued by U.S. Chamber of Commerce March 31.
CPA Island: CPA Island actually takes place in the virtual world of Second Life, as reported by the Maryland Association of CPA’s (MACPA) blog, “CPA Success.” (We appreciate being listed in MACPA’s recent post, “Read Anything Good Lately? Try These.”) For additional background, see “CPAs Find an Island on Second Life,” by Michael Cohn, Editor in Chief, WebCPA, Nov. 21, 2007.
In related news, speaking of CPA's and Survivor (or survival), the U.S. Treasury Department's Advisory Committee on the Auditing Profession (ACAP) announced it will hold a telephone conference call meeting beginning at 1pm Eastern Time today, which will be webcast. The announcement states "The agenda for this meeting is to consider Subcommittee recommendations on how to enhance the sustainability of the auditing profession and whether to use the Subcommitee recommendations as the basis for a report, which will be considered at a future meeting of the Advisory Committee and which will be issued for public comment." See our prior reporting on ACAP's March 13 meeting.
Dunder Mifflin CFO: Ellen Heffes, Executive Editor of Financial Executive Magazine and I had a chance to interview Andy Buckley, for whom acting is a kind of “Second Life,” as he portrays CFO David Wallace on NBC’s Emmy-award winning show, “The Office.” (New episodes return April 10.) Buckley’s ‘other job’ is with an investment bank that we promised not to disclose. Look for our interview of Buckley in an upcoming issue of Financial Executive Magazine or one of its online exclusives columns.
FEI’s blog was named one of the “Smart Stops on the Web” in the March, 2008 edition of the AICPA’s Journal of Accountancy. If you received this blog post from ‘a friend’ and you’d like to receive our blog by email real-time, enter your email address here.
We figured, if SEC Chairman Christopher Cox can promote a little April Fools humor, (as reported by the Financial Times last year in, “The SEC’s Prank Press Release,” and “SEC's April Fuhrst Attempts Lighten Regulation) it’s worth a try! Among those quoted in the SEC’s prank press release last year were SEC spokeswoman April Fuhrst, Deputy Chief Economist Anita Moore-Profit, Ass't Chief Information Officer Edgar Philing, Assoc. Deputy Director of the Division of Corporation Finance Rita Tennkae, and my personal favorite, Ass't Deputy Director of the Enforcement Division Sue Offen. In honor of April Fools, you may want to check out some of the “Top 100 April Fools Day Hoaxes of All Time,” published by the Museum of Hoaxes. See, e.g., #4, “Taco Liberty Bell,” and #67, “Y2K Solved.”
On a more serious note regarding the topics listed in our subject line above:
Treasury Blueprint: see our coverage yesterday; and for reactions to the plan, see e.g.:
“Frank Statement on Paulson Plan,” in which House Financial Services Committee Chair Barney Frank which says, in part, “We have not yet analyzed the proposals in detail, and I have disagreements with some specifics… But given the fact that is a contribution to a profound national discussion that cannot be concluded in the months before the election, Secretary Paulson has performed an important service. By rejecting the argument for the status quo; by making it clear that new regulation done properly enhances the function of the market rather than detracts from it; and by explicitly including consumer protection among the core functions of the system he proposes, he has narrowed, albeit by no means removed, the differences between his position and that of many Democrats.”
“Dodd Statement on Treasury’s Blueprint for Regulatory Reform,” in which Senate Banking Committee Chair Christopher Dodd says, in part: “The President and his advisors recently put up $30 billion of taxpayer funds to help one company on Wall Street. ... I intend to investigate the deal at a Banking Committee hearing that I will chair on Thursday.” He added, “[I]f the President and his advisors can find $30 billion to help one company on Wall Street, they can surely find a way to help millions of Americans facing higher mortgage payments and falling home prices…This regulatory Blueprint will do little, if anything, for those Americans...on the one hand, it would reduce the fragmentation and balkanization that has often encouraged regulators to compete with each other by weakening rather than strengthening regulation. On the other hand, it would create weaker standards to protect investors and consumers.... We should be guided by a couple of basic, common-sense principles. First, where we can simplify and rationalize regulation, we should... Second, we must restore the trust and confidence of investors and consumers. That trust has been shattered -- not because regulators did too much, but because they did too little.
“Chamber Welcomes Call for Financial Regulatory Modernization and Simplification - Treasury Blueprint Advances Needed Debate,” press release issued by U.S. Chamber of Commerce March 31.
CPA Island: CPA Island actually takes place in the virtual world of Second Life, as reported by the Maryland Association of CPA’s (MACPA) blog, “CPA Success.” (We appreciate being listed in MACPA’s recent post, “Read Anything Good Lately? Try These.”) For additional background, see “CPAs Find an Island on Second Life,” by Michael Cohn, Editor in Chief, WebCPA, Nov. 21, 2007.
In related news, speaking of CPA's and Survivor (or survival), the U.S. Treasury Department's Advisory Committee on the Auditing Profession (ACAP) announced it will hold a telephone conference call meeting beginning at 1pm Eastern Time today, which will be webcast. The announcement states "The agenda for this meeting is to consider Subcommittee recommendations on how to enhance the sustainability of the auditing profession and whether to use the Subcommitee recommendations as the basis for a report, which will be considered at a future meeting of the Advisory Committee and which will be issued for public comment." See our prior reporting on ACAP's March 13 meeting.
Dunder Mifflin CFO: Ellen Heffes, Executive Editor of Financial Executive Magazine and I had a chance to interview Andy Buckley, for whom acting is a kind of “Second Life,” as he portrays CFO David Wallace on NBC’s Emmy-award winning show, “The Office.” (New episodes return April 10.) Buckley’s ‘other job’ is with an investment bank that we promised not to disclose. Look for our interview of Buckley in an upcoming issue of Financial Executive Magazine or one of its online exclusives columns.
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