The SEC has a new “chief accountant.” He is a retired partner of a Big 4 firm. What do you think in his background is a good match for the requirements of the position? Do you seen any downsides in appointing him to this position?
The chairman of the FASB says that complexity in accounting standards can be costly to investors and companies. Of the examples provided in the article, how would you determine the cost to companies of providing the information? For instance, how do you measure the cost of distinguishing current deferred tax assets from noncurrent deferred tax assets, and, using your measure, how costly do you think this disclosure is for companies to make?
What are companies doing with all that cash raised from issuing bonds? Name as many ratios as you can that would be affected by the changing capital structure. Will capital structure changes affect the value of the firm?
Who do you think is right, the chairman of the IASB (Mr. Hoogervorst), or the vice-chairman of the IASB (Mr. Mackintosh), about whether global accounting standards are achievable and inevitable? Does it matter if there are global standards or not? What are the benefits of global standards? What are the costs?
If you were asked on a job interview, could you explain the relation between interest rates and the funding status of defined benefit pension plans? Could you explain who are the winners and who are the losers (and why) by changing the interest rate to a 25 year average rate from a 2 year average rate?
Why do you think the IASB and FASB changed their accounting for estimating loan loss reserves (aka, allowance for bad debt)? If smaller banks are unprepared to make the changes, who do you think should shoulder the blame?
Which lease accounting model do you think is “better”: the IASB’s or the FASB’s? Will it matter if the IASB and FASB do not agree and go in separate directions?
What is your opinion about getting rid of corporate taxes altogether and just requiring shareholders to pay taxes on dividends and capital gains?
According to the article, accounting as an industry has an average pre-tax profit margin of 19.8%. In your opinion, why do you think accounting firms can command such a relatively high margin?
What do you think are the implications of the NLRB ruling about joint employer relationships for McDonald’s and it franchisees? Would this ruling possibly affect recognition of contingent liabilities? If so, how?
Do you believe that fewer accounting restatements means that the quality of financial reporting has improved? How would you define high quality financial statements?
If you were the CEO or CFO of a public company, how would you make the decision on whether to report potential violations to the SEC?
According to the article, Target’s profitability suffered in part because of the rigid performance metrics that were introduced. Explain how introducing performance metrics can alter employees’ behavior and affect the “creative culture” that Target had. What financial ratios would capture reduced performance?
Can you think of other ways that tax policy drives corporate decisions, in addition to the decision to relocate HQ to overseas, such as Medtronic’s planned acquisition of Covidien?
Good ideas for working capital management are in this article. As you explore career options, does this type of work (CFO, internal accounting) appeal to you?
Should boards of directors diversify? Why or why not? What are the potential benefits of a diverse board of directors? Why do you suppose Skechers and Monster have not followed through with diversification?
Given the length of time on the joint revenue recognition project, what does the new revenue recognition standard suggest about collaboration between the FASB and the IASB? Will the new standard improve accounting? If so, how exactly?
Do you believe that the disclosure about conflict minerals will be useful? How would you define useful?
