Where did money come from?

Metal coins, paper, crypto-coins, and banking, where did our current money systems originate? Listen to this fascinating podcast from Think, KERA to learn more. “The first writing was just accounting.” Sounds like CPAs invented writing.

The Invention Of Money
Jacob Goldstein, co-host of NPR’s “Planet Money,” joins host Krys Boyd to talk about how our world goes ‘round in large part because we’ve all swallowed hard and agreed to not ask too much about the real value of currency. His new book is called “Money: The True Story of a Made-Up Thing.”

Business Tax Season During COVID

Thank you to the CPA Journal and Howard B. Levy, CPA for this detailed and helpful article about financial reporting, taxes, auditing and more for businesses as we approach our first tax season amidst COVID. The topics addressed include:

Use of estimates
Risk assessment.
Subsequent Events
Internal Control
Accessibility to Audit Evidence and Client Personnel
Disclosure of Risks and Uncertainties
Accounting Estimates
Valuation of receivables, inventories, investment securities, and deferred tax assets.
Impairment of goodwill, other intangibles, or long-lived assets.
Loss contingency accruals and disclosures.
Business interruption insurance recoveries.
Future operating losses.
CARES Act
Tax effects.
Government loans and other benefits.
Relief for financial institutions from certain GAAP provisions.
Revenue Recognition
Leases and Other Contract Modifications
Debt Covenant Compliance
Inventory Observations
EOM, Explanatory, and CAM/KAM Paragraphs
MD&A and Other Disclosures for Public Companies and Governments

Financial Reporting and Auditing Implications of the COVID-19 Pandemic

Some Practical Guidance

Go Paperless!

Ready to lose the piles, folders, and filing cabinets in your home office? Now’s the time! Wirecutter recommends the Scanbot Pro Ap for Android and IOS to begin saving your paper files onto your phone and home computer. One exciting feature is text recognition that will allow you to search for any word within each document. Wirecutter also offers a list of shredders for when you no longer need the paper files, How to Go Paperless With Your Home Office. Organizing these files into a specific folder and backing them up onto a thumb drive or other external hard drive is the final, important step. They assure that you will be amazed during tax season when all of your documents are accessible at the touch of a button.

Avoiding Money Decisions?

Many of us, even if trained in the field, often struggle with decisions about our finances and retirement. Thinking about money opens the door to discomfort for most,m as Tim Herrarra for the New York Times states in his article, A Smarter Way to Think About Financial Decisions.

These feelings span all levels of financial training, “I have a Ph.D. in business and an M.B.A. in finance, on top of a degree in architecture, so I think I can understand financial products pretty well,” Professor Sela said. “But still, every time I get a letter from my bank, my instinct is to shove it in some drawer.”

How do we reframe our thinking and make these decisions easier? Try picturing the questions from a lifestyle vs. solely financial product view, such as, I would love to visit Paris or take a cruise around the world, as opposed to just choosing which annuity would suit you best.

Short-Term Rentals

Ever thought about renting your home for holiday travelers or summer vacationers? Or maybe during a music festival or race? There are tax implications that come with this type of real estate. Before you take the plunge, read this informative article by Mike D’Avolio, CPA, J.D. for the Journal of Accountancy.

Short-term rentals, the sharing economy, and tax

Grandparents Help With College

As college expenses continue to increase, grandparents are beginning to step-in and offer assistance to their grandchildren. John F. Wasik, for the New York Times offers sound advice for those wishing to help with their grandchildren’s college expenses. The Best Way to Help a Grandchild With College. There are many aspects to be considered in order to maximize your monetary support of a student, such as when the money is applied or whose name appears on the account. Read the full article to learn more about the amazing gift of higher-education that you can share with your grandchildren.

Just Who Are You Paying?

How many recurring charges are on your credit card at the moment? You may be surprised. A new service, Trim, will scan your bills, produce a list of these payments and cancel ones you wish to no longer utilize. This is a free service from Trim as they attempt to build a client base for their personal finance assistance business. Even if you choose not to employee Trim, taking a look at their ranked, most common charges list can be helpful and may inspire you to take the initiative to keep more money in your own pocket.

Cutting Off Those Recurring Charges You Forgot About

Do You Need An Accountant For Your Small Business?

Anyone starting their own business knows that keeping costs down is of vital importance. Alyssa Gregory encourages new business owners to consider twenty-one areas where accountants will make their lives easier. In her article, Do I Need An Accountant, she provides a useful checklist and summary of items required for new start-ups, such as opening business bank accounts, governmental forms and classification of contractors vs. employees. In her assessment, knowing when to enlist the help of a professional is key to creating and maintaing fiscal health.

Subprime lenders are being investigated by SEC for accounting fraud

The SEC’s investigation into the subprime mortgage mess now includes examinations of the financial statements of the mortgage lenders who are generally blamed for creating the disaster that has swamped the global economy. Lenders suspected of misstating loss reserves, asset values, or the prices on foreclosed properties are going to be pursued by the SEC, according to commissioner Elisse Walter. If a lender’s disclosures about loan quality, credit risks, rates of default, mortgage delinquency, and exposures to the subprime market were inaccurate, then chances are, its executives are going to be paid a visit from the SEC’s enforcement staff. Walter was testifying during a March 20, 2009, House Financial Services Committee hearing on investor protection and enforcement during the subprime meltdown.

So far, the agency’s enforcement division has filed nine cases involving subprime issues, and it has many other subprime matters under active investigation, Walter told lawmakers.

The subjects of the investigations to date are primarily subprime lenders, credit rating agencies, home builders, and companies that provided mortgages to investors to enable them to finance securities purchases. The agency is also looking at the investment banks that bundled the mortgages into securities and then sold them into the secondary market.

Source: WG&L Accounting & Compliance Alert Checkpoint 3/23/09

Failed Monsters of Mortgage Finance

AIG is back at the trough: US Throws New Lifeline to AIG

On October 7 the House Committee on Oversight and Government Reform held their second day of hearings on the financial crisis in Wall Street. The first day addressed Lehman Brothers, the second, AIG.

Michael Sullivan, the fired executive of AIG, blamed mark to market accounting rules required under FASB 157 for all of AIG troubles: “No disaster as massive as the unforeseen and unprecedented financial market disruption that has occurred over the past year is the result of a simple or single cause. The world’s current economic challenges are obviously related to multiple actions by multiple parties. To assist the Committee, I would like to focus on one particular factor-the role played by one accounting rule applied to corporations.

“The accounting rules require that certain assets be ‘marked to market.’ In other words, companies must declare the value of those assets, on a quarterly basis, at the price such assets could sell for on the market at that point in time. Companies must declare these values on their books even if they have no intention of, or immediate need to, sell the assets, and even if they have not realized any actual gain or actual loss. FAS 157, which was adopted relatively recently, set out specific guidelines as to how companies must determine the “market price” of certain categories of assets. However well FAS 157 operates under any reasonably foreseeable market conditions, in the unprecedented credit crisis which began in the summer of 2007, FAS 157 had, in my opinion, unintended consequences. In a distressed market where assets cannot be readily sold, companies are forced to declare the value of those assets at fire-sale prices.”

One of the fundamentals of accounting and taxation is that fair market value is what a willing seller and a willing buyer will agree is the value of an asset. If an asset can’t be sold, it means there are no willing buyers, and the asset has no value. The difficulty with the “toxic assets” that companies want to offload onto the taxpayer is that there is no market so that it’s hard to determine a value.

From the hearing transcripts: Congressman Christoper Shays (R, CT): “Yesterday we sent a formal request to the Chairman asking for a specific commitment to make the federal mortgage companies a priority in this hearing, not an after afterthought. We can’t wait until Halloween to unmask these two failed monsters of mortgage finance.”

To read the complete hearings: http://oversight.house.gov/story.asp?ID=2208.

The Emergency Economic Stabilization Act mandated a study of these Mark to Market Rules. The study is to be performed by the Federal Reserve and Department of the Treasury. The report is due January 9, 2009.

To listen to the first SEC hearings on this matter: SEC Roundatable.