Author Suggests the Elimination of Accounting?

That may sound pretty dire even though the title of the new book Baruch Lev has co-authored is called  “The End of Accounting,” and suggests the finale of financial reporting as it stands currently, he cautions that he really isn’t calling for its absolute elimination. In an interview with David M. Katz and printed in CFO, Mr. Lev explains exactly what he is suggesting.

author-suggesting-the-elimination“We don’t recommend getting rid of financial reports. Financial reports as an historical document will always be important. You need to have some kind of an historical perspective of the business,” Lev, a professor of accounting and finance at New York University’s Stern School of Business, acknowledged.

“There is some importance in knowing the past,” he adds. “I don’t completely disregard it. But it doesn’t give you linear information about what will happen in the future.”

“What we are saying is that current financial reports don’t provide a clear guide with respect to the future. And that’s what we set out to change,” says Lev, referring to the book he wrote with Feng Gu, a professor of law and accounting at the University of Buffalo. 

In their book, recently published by Wiley, the authors contend and attempt to prove that “those voluminous and increasingly complex quarterly and annual reports… [have] lost most of [their] usefulness to investors….” They cite the Financial Accounting Standards Board’s 700-plus-page 2014 revenue recognition standard as an example of such length and complexity. 

Based mainly on non-accounting information, the report would focus on a company’s business model and execution of it. The document would highlight such “fundamental indicators” as Internet and telecom companies’ new-customer and churn rates; car insurers’ accident severity and frequency and policy-renewal rates; biotech and pharmaceutical company clinical trial results; and energy companies’ proven oil and gas reserves.

These indicators “are more relevant and forward-looking inputs than … traditional accounting information” like earnings and asset values, according to the book.

At least since the accounting scandals of the early 2000s, Lev has been a well-known advocate for more extensive corporate reporting of intangible assets. Following are edited excerpts from CFO’s interview with the financial reporting luminary. 

What does your title, “The End of Accounting,” actually mean?
The end of accounting in the current way it is conducted, meaning the constantly increasing, extremely complex regulations that fewer and fewer people understand. This, in our opinion, should come to an end. 

How practical would it be to put your system in place?
Very practical. We demonstrate our disclosure paradigm on four specific industries: media and entertainment, oil and gas, pharma and biotech, and insurance companies. The Strategic Resources and Consequences Report is not another 60- or 70-page report on top of the financial statements. It’s a one-page or, at most, two-page report which focuses on all the things which are missing from the financial statements.

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Accounting Considered Most Profitable Business in 2016

Accounting-related companies (accounting, tax preparation, bookkeeping and payroll service companies) are the most profitable, with net profit amounting to 18.3 percent of sales, on average, based on a financial-statement analysis for privately held companies for the 12 months ended June 30.  Legal services firms and real-estate leasing companies are tied for second and third in profitability, with average net profit margins of 17.4 percent.

Sageworks Most Profitable Industries 2016

“Some businesses tend to have healthier bottom lines by the very nature of the industries that they operate in,” said Sageworks analyst James Noe. Many of the most profitable industries sell services rather than products, he noted, so their operations don’t require raw materials or other up-front costs that would wind up in the middle of their income statements and eat into the bottom line. “They don’t sell or produce finished goods,” he said. “They don’t make the tractors to sell to farmers or they don’t buy groceries to sell to consumers. In other words, you don’t need plastic to provide an audit for a company; it’s just mostly human capital that’s being utilized, and that lends to a high margin generally.”

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Top 11 Tax Stories for 2015

Top 11 Tax Stories for 2015It’s the end of the year and that means it is time for a non-ending supply of “Best Of” and “Year In Review” lists and stories. We here a Depreciation Guru are certainly not above the fray, as we will submit similar type stories now and in the weeks to come. Today we look at the “Top 11 Stories” in accounting according to the editors of Accounting Today. Why eleven instead of ten you ask? Because eleven is one better than ten!

  1. Tough times at the IRS – Hamstrung by budget cuts, the IRS was able to deliver only the meagerest taxpayer service in what was already going to be a difficult season.
  2. The terrible tangible property regs – At the start of 2015, as businesses and their advisors went to apply the fairly recently codified tangible property repair regs, they quickly discovered that they were terrible, tangled trap.
  3. The glass ceiling – In February, Deloitte named a woman, Cathy Engelbert, as its CEO, and then in May, KPMG named Lynne Doughtie its CEO, making the top spots at the Big Four 50 percent female. 
  4. The Supreme Court weighs in – Two June decisions made the Supreme Court a major force in the accounting sphere: it upheld the Affordable Care Act, and it struck down barriers to same-sex marriage.
  5. Learning how to learn – Competency-based learning – where you have to prove that you actually learned something – is the next big frontier.
  6. Audit quality issues – The AICPA was on the spot with initiatives and ideas for improving both audit quality and peer review. Expect the results to impact your practice in 2016.
  7. Change and continuity at the PCC – In August, the Financial Accounting Foundation named Candace Wright to succeed Billy Atkinson as chair of the PCC. 
  8. Tax-related ID theft – As many as 1 in 4 of their clients were the victim of tax-related ID theft last tax season, and in June the IRS reported that its Get Transcript function had been hacked. 
  9. Pursuing value, in the cloud and elsewhere – Accountants and firms ranged ever-more broadly in pursuit of new value to offer clients, beyond the profession’s traditional tax, audit and accounting services. Much of this involved the cloud.
  10. IFRS resurgent – In a variety of forums, SEC Chair Mary Jo White and Chief Accountant James Schnurr refused to let International Financial Reporting Standards fade away.
  11. The staff crunch – As with last year, the lack of staff remains one of the top stories in accounting. Despite public firms having hired the largest number of college graduates ever, they’re still struggling to fill spots. 

Read The Full Story Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Shift Change Coming for Accounting?

shift-change 2We came across this article by Tom H. on LinkedIn. In it he speaks of his younger days as a security guard at the Bethlehem Steel shipyard and hearing the sound of the factory whistle that signaled the shift change. He was fascinated that the workers came on and pretty much picked up the work that the prior worker was doing with the same skills as the prior shift. According to Ted a new shift change is coming for the accounting profession, but the skill set needed will be different.

The shift change is the transfer of the retiring baby boomers to the next generation of leaders that will be taking the helm in the next few years. Except this time it is not the same as the shipyard. This time the incoming shift will require a new set of skills and tools to continue the work of the prior shift. This time it’s different.

The shift change is different in five fundamental areas:

  1. Technology
  2. Generations
  3. Workplace
  4. Leadership
  5. Learning

The key to managing this shift change is a very simple, but very big idea – develop your talent by keeping yourrate of learning greater than the rate of change and greater than their competition. This is true for organizations as well as individuals. The secret to talent development…is in the 4 C’s – Competencies, Career Path, Curriculum, and Cloud Learning:

The skills needed for the shift change are these:

  1. Leadership
  2. Communications
  3. Strategic thinking
  4. Collaboration and synthesis
  5. Being tech savvy

How can you respond to the shift change whistle? The changes in technology have ushered in a new era and opportunity to help accountants develop talent. There are new systems available that were previously only available to the largest organizations that can provide a learning platform to support talent development.

Read The Full Article Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Change in Global Accountancy, Are You Prepared?

ACCA’s Accountancy Futures Academy has carried out a research study on drivers for the future. Its report, 100 Drivers of Change For the Global Accountancy Profession, was compiled by Fast Futures Research drawing on the insights of the members of the academy, as well as the views of members of the Institute of Management Accountants (IMA) and ACCA’s other global forums and experts.

The research goes further than simply identifying the 100 drivers of change for accountants. It identifies the 10 ‘must dos’ for businesses and the profession to effectively weather volatility and shocks while reaping the benefits of existing opportunities.

Five Imperatives for Business:

  1. Assume and Plan for Volatility
  2. Build the Radar
  3. Pursue Technology Leaders
  4. Prepare for True Globalization
  5. Develop a Curious, Experimental and Adaptable Mindset

Five Imperatives for the Accountancy Profession:

  1. Embrace an Enlarged Strategic and Commercial Role
  2. Establish Trust and Ethical Leadership
  3. Focus on a Holistic View of Complexity, Risk and Performance
  4. Develop a Global Orientation
  5. Reinvent the Talent Pool

The web site provides downloadable pdf links to both a 6 page summary version and the full 44 page report. As this year comes to a close take some time to read this paper, as it provides for some very interesting insights about the key drivers of change in the coming years. For anyone in an accountancy profession this could help you prepare for events that will have a critical impact on your future business.

Questions or comments about this post? We invite you to respond in the space below.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.