We can be frustrated by the lack of accountability in others or the seeming unwillingness of others to be held to account. Long ago I learned to stop looking for accountability in the world outside and look within myself. If others see you as one who accepts the consequences of being called to account, then they will be encouraged to accept being held accountable. Those who demand accountability in others but who are unwilling to be held accountable, drive people away. Do as I say but not as I do, does not work with professionals.

A popular recent post is the one I wrote on the AICPA’s effort to develop a new SME reporting framework. Had I known it was going to generate so many hits, I would have made it shorter and more to point. Hint if you have not read it yet, you might skip about half-way down. Recently I became aware that the IASB had earlier notified us they intend to develop a subset of IFRS for SMEs for the micro entity – basically the very small business. Using their definition, that would cover quite a few of my firm’s clients. Perhaps the AICPA’s effort was intended to mirror the IASB’s effort and they intended their new framework to be the U.S. answer to SME IFRS for micro-entities. Again, the AICPA is not an official standard setting body; however, maybe the FASB can pick up the guidance and meld it into their private company reporting effort and get us big GAAP, little GAAP, and tiny GAAP. I don’t think it will replace tax or cash basis reporting…but interesting.

In the small business side of our market, we just don’t have much ongoing demand from users for GAAP or IFRS statements. Here is a link to the recent JofA article. http://www.journalofaccountancy.com/News/20126128.htm

Link to my earlier post: https://insidecpa.com/2012/06/aicpa-sme-effort-too-many-cooks/

At the A&A conference last week a speaker suggested that we use the ‘six degrees’ model for a guide to independence. She suggested at least 3 degrees were required.

I agree. Under current independence guidelines we can audit the company where our brother-in-law is the CEO.  Under the ethics guidance, we cannot audit any company were an immediate family member is a part of management.  Our sister would be immediate family, but our brother-in-law would not.

Now, if our brother-in-law also owned shares and they lived in a community property state, then we would be out…….

I think most of us agree that we should not consider ourselves independent of a company controlled by our in-law. Remember we must be independent in appearance as well as fact.

Sister would be one degree, brother-in-law two….I agree with three idea.

I recently attended a leading partners meeting for my region of CPAmerica. In the interest of full disclosure, I am not the managing partner for our firm. I came off the bench for this one. However, I find that when I attend these meetings I end up both inspired and depressed. Inspired because being in the company of such great colleagues challenges me to rise up to my best and allows me to see the potential for my firm and in myself. Depressed because I see the obstacles in our way, obstacles that experience teaches are difficult to surmount. Those in the position of power and benefiting handsomely from the situation are reluctant to change, even if they admit to the long-term benefit. If I want to be a leader, I need to make sure inspiration wins out.

With the convergence projects over the last few years, the remaining differences are fairly small and, even then, only an accountant might understand or appreciate the reporting subtleties that result.  Will mezzanine presentations confuse? Will anyone care if they do?

Switching to IFRS may help prevent the politicization of accounting standards and hopefully forestall future efforts to legislate GAAP – recall the misguided efforts to stop expensing of stock options and the lobbying of banks who wanted to stick their collective heads in the sand when it came to writing down CDOs. IFRS Rule 9 aside, the invisible hand will not be fooled. Continue reading →