Tidbits Political Quotations
To Accompany June 2020 Additions to Bookmarks at
http://faculty.trinity.edu/rjensen/TidbitsDirectory.htm

June 2020

Bob Jensen at Trinity University 

For earlier editions of Fraud Updates go to http://faculty.trinity.edu/rjensen/FraudUpdates.htm
For earlier editions of Tidbits go to http://faculty.trinity.edu/rjensen/TidbitsDirectory.htm
For earlier editions of New Bookmarks go to http://faculty.trinity.edu/rjensen/bookurl.htm 
Bookmarks for the World's Library --- http://faculty.trinity.edu/rjensen/bookbob2.htm 

Click here to search Bob Jensen's web site if you have key words to enter --- Search Box in Upper Right Corner.
For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/

Bob Jensen's Blogs --- http://faculty.trinity.edu/rjensen/JensenBlogs.htm
Current and past editions of my newsletter called New Bookmarks --- http://faculty.trinity.edu/rjensen/bookurl.htm
Current and past editions of my newsletter called Tidbits --- http://faculty.trinity.edu/rjensen/TidbitsDirectory.htm
Current and past editions of my newsletter called Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm

Bob Jensen's Pictures and Stories
http://faculty.trinity.edu/rjensen/Pictures.htm

All my online pictures --- http://www.cs.trinity.edu/~rjensen/PictureHistory/

David Johnstone asked me to write a paper on the following:
"A Scrapbook on What's Wrong with the Past, Present and Future of Accountics Science"
Bob Jensen
February 19, 2014
SSRN Download:  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2398296  

Google Scholar --- https://scholar.google.com/

Wikipedia --- https://www.wikipedia.org/

Bob Jensen's search helpers --- http://faculty.trinity.edu/rjensen/searchh.htm

Bob Jensen's World Library --- http://faculty.trinity.edu/rjensen/Bookbob2.htm

Possibly the Number 1 Resource for CPA Exam Candidates
AICPA:  Uniform CPA Exam Blueprints ---
http://www.aicpa.org/BecomeACPA/CPAExam/ExaminationContent/DownloadableDocuments/cpa-exam-blueprints-effective-20170401.pdf?utm_source=mnl:cpald&utm_medium=email&utm_campaign=07Apr2017

CPA exam will increase focus on higher-order skills
"What Higher Order Skills Will be Tested on the Next CPA Examination," by Ken Tysiac, Journal of Accountancy, April 4, 2016 ---
http://www.journalofaccountancy.com/news/2016/apr/new-cpa-exam-201614166.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=04Apr2016

Bob Jensen's CPA Exam Helpers ---
http://faculty.trinity.edu/rjensen/Bookbob1.htm#010303CPAExam

Coursera is offering 90% of its prestigious (think Ivy League) online classes to college students for free until September 30, 2020 — here's how to enroll ---
https://www.businessinsider.com/coursera-free-classes-college-students

Three Interesting (albeit negative) Sites on Peer Review (I highly recommend them even though one is my own)

The Guardian:  Retracted (peer reviewed) studies may have damaged public trust in science, top researchers fear ---
https://www.theguardian.com/science/2020/jun/06/retracted-studies-may-have-damaged-public-trust-in-science-top-researchers-fear

Those who think that peer review is inherently fair and accurate are wrong. Those who think that peer review necessarily suppresses their brilliant new ideas are wrong. It is much more than those two simple opposing tendencies ---
http://rodneybrooks.com/peer-review/
The comments are especially interesting

Bob Jensen:  574 Shields Against Validity Challenges in Plato's Cave ---
http://faculty.trinity.edu/rjensen/TheoryTAR.htm
Prestigious accounting research journals claim they encourage replication. They just don't encourage replication because replication studies in academic accounting research are blocked by the peer review process.

Jensen Comment
This is why I spend such a large part of every day reading blogs. Blog modules are not formally refereed but in a way they are subjected to widespread peer review among the entire population of readers of the blog as long as the blogger publishes their replies to to his or her blog modules. This is why I think blogs and listservs are less suppressive of new ideas.

One of the stupid unmentioned results of peer review in our most prestigious academic accounting research journals is that they rarely publish articles without equations. Go figure!

Racial Profiles of Accountants in the USA (does not include accountants of color other than African Americans)

There are 1,762,000 accountants and auditors in the United States for the year 2008. They represent 1.2% of the total 145,362,000 employed Americans for the same year. 61.1% of American accountants and auditors are female while 10.2% are Asian. This data is based on the The 2010 Statistical Yearbook of the United States Census Bureau ---
http://infomory.com/numbers/number-of-accountants-in-the-us/
For updates see
https://www.census.gov/library/publications/time-series/statistical_abstracts.html
Note that not all "accountants" even go to college. especially those trained to do some accounting functions (think bookkeeping) on the job. To sit for the CPA examination virtually all candidates now must have five years (150 semester credits) including required courses in accounting, auditing, ethics, and business.

Overall participation of African-Americans in the accounting profession continues to be low. According to the U.S. Bureau of Labor Statistics (BLS), African-Americans represent 12.1% of the employed workforce but only 8.2% of the accountant and auditor workforce ---
https://www.journalofaccountancy.com/issues/2019/jan/challenges-continue-for-african-american-accountants.html

Out of 650,000 CPAs in the U.S., an estimated 5,000 are black, according to the National Association of Black Accountants (NABA). The number of black accountants has changed little in the past two decades while the number of their Asian and Hispanic colleagues has grown to more than 12% and 7% of the field ---
https://news.bloombergtax.com/financial-accounting/fifty-years-little-progress-for-black-accountants

The first African American CPA was John Wesley Cromwell, Jr., licensed in 1921. John went on to lead a very successful career after he became the controller of Howard University in 1930
http://gordoncpablog.wordpress.com/2009/04/10/56/

Jensen Comment
When I was Chair of the Accounting Department at Florida State University (1978-1982) there were two major university accounting programs in Tallahassee --- FSU and Florida A&M. The FSU program was heavily geared toward preparing students for the CPA examination, and we did have African American Accounting majors in the FSU program who prepared for and did become CPAs. The Florida A&M (one of the better-known historically black universities)  program at the time was not geared to preparing accounting majors to take the CPA examination. Accounting majors at Florida A&M usually had corporate apprenticeships to become corporate accountants rather than CPAs. These accounting student apprenticeships included major corporations like IBM and Exxon that gave a significant amount of money to historically black universities in general.

I mention this because I think most historically black universities (certainly not all like Howard University) at the time modeled themselves after Florida A&M. I think this reflects African American career tracks in accounting that bypassed the CPA examination entirely. African Americans aspiring to be CPAs mostly chose other universities like FSU.

Footnote:  I've not followed how Florida A&M and other historically black universities changed their accounting curricula and goals since 1982

The PhD Project --- http://www.phdproject.org/

Since 1994, The PhD Project has more than tripled the number of minority business school professors...from 294 to over 960. These individuals are inspiring and encouraging a new generation of business professionals. Click here to learn more about our fifteen years of achievements, real insights on the journey to a PhD degree and the professors who are making a big impact.

Are you ready to be the next role model? Currently, The PhD Project has 400 minority doctoral student members pursuing their dream. Like you, they were professionals or recent grads satisfying their quest for a high level of achievement and answering the call to mentor. With an expansive network of support, The PhD Project is now helping them prepare for success in academia.

Whether you become involved as a doctoral student, professor, participating university, or supporting organization...just become involved. Learn more by visiting the links on the left.

Participation in The PhD Project is available to anyone of African-American, Hispanic American and Native American descent who is interested in business doctoral studies.

Jensen Comment
The PhD Project commenced in the KPMG Foundation under the guidance of Executive Partner Bernie Milano who increasingly devoted more time, money, and sweat to raise money from other accounting firms and from corporations. It has since expanded beyond accounting doctoral programs into other business disciplines.

Above and beyond helping minority students get into selected doctoral programs, Bernie has been dogged about trying every which way to see them to the graduation day endings when a wide array colleges in literally every part of the world are eager to hire them. These students have many more hurdles to cross than most other doctoral students, and Bernie's Dream is to help them across the biggest hurdles without making it any easier for them then all other doctoral students.

Most importantly, the salting of these graduates around the world as role models is increasingly vital to inspiring undergraduate and even K12 minority students to aspire to become practicing professionals and/or doctoral students themselves. These role models are living proof that Berne's Dream can become their dream.

Thank you Bernie, KPMG, and the many other accounting firms and corporations have made Bernie's Dream come true.

How doctoral programs can help minority candidates
Video on the PhD Completion Program --- http://www.youtube.com/watch?v=zWtUTZk1w4Q

Also read about the efforts of the Bill and Melinda Gates Foundation --- Click Here

Added Jensen Rant
Often potential minority candidates for accounting doctoral programs are CPAs. They are strong accounting candidates that are attracted to accounting and turned off by the heavy mathematics, statistics, and econometrics years of study in accountancy doctoral programs that have almost no accountancy. It would help greatly if some of our leading doctoral programs would open up paths of study other than "accountics."

Alternative study and research paths could include paths of case method and field research. Those graduates may never publish in The Accounting Review (which now publishes zero case and field research studies according to the latest report of the TAR Editor), but there are research journals that will publish case and field research studies.

My rants ad nauseum on the narrow mindedness of present accountics doctoral programs are shown at ---
http://faculty.trinity.edu/rjensen/theory01.htm#DoctoralPrograms

In his first President's Message, Gary Previts mentions the Plumlee report on the dire shortage of accountancy doctoral students and provides a link to the AAA's new site providing resources for research and experimentation on "Future Accounting Faculty and Programs Projects" --- http://aaahq.org/temp/phd/index.cfm
Note especially the Accounting PhD Program Info link with a picture) and the PhD Project link (at the bottom):

Welcome to the preliminary posting of a new resource for the community participating in and supporting accounting programs, students, faculty, and by that connection practitioners of accounting. We plan to build this collection of resources for the broad community committed to a vital future for accounting education. This page is an initial step to creating a place where we can come together to gather resources and share data and ideas. Making A Difference: Careers in Academia Powerpoint slides created by Nancy BaGranof and Stephanie Bryant for the 2007 Beta Alpha Psi Annual Meeting. Permission granted for use and adaptation with attribution. Accounting PhD Program Info New Research Projects by the AAA on the Trends and Characteristics of Accounting Faculty, Students, Curriculum, and Programs Part I: Future of Accounting Faculty Project (Report December, 2007) Part II: Future of Accounting Programs Project Part I will describe today's accounting academic workforce, via demographics, work patterns, productivity, and career progression of accounting faculty, as well as of faculty in selected peer disciplines using data from the national survey of postsecondary faculty (NSOPF) to establish trends, and a set of measures will be combined to benchmark the overall status of accounting against (approximately) 150 fields. This project will provide context and data to identify factors affecting the pipeline and workplace. Part II will focus on expanding understanding of the characteristics of accounting faculty, students, and accounting programs, and implications of their evolving environment. The need for the Part I project illustrates how essential it is for the discipline and profession of accounting that we establish a more standard and comprehensive process for collecting, analyzing, and reporting data about accounting students, doctoral students, faculty, curriculum, and programs. More Resources on the Changing Environment for Faculty: The Reshaping of America's Academic Workforce David W. Leslie, TIAA-CREF Institute Fellow The College of William and Mary TIAA Institute Research Dialogue Series, 2007 Jim Hasselback's* 2007 Analysis of Accounting Faculty Birthdates *Copyrighted – requests for use to J. R. Hasselback Among U.S. Accounting Academics -- 53.4% are 55 or older From the Integrated Postsecondary Education System (IPEDS) 34.8% of all full-time faculty in the U.S. are non-tenure-track -- nearly 2 in 5 of all full-time appointments Between 1993 and 2003 the proportion of all new full-time hires into "off-track" appointments increased each year from 50% to nearly 3 in 5 (58.6%) Reported in J. Schuster & M. Finkelstein (Fall, 2006). "On the Brink: Assessing the Status of the American Faculty," Thought & Action 51-62. Supply and Demand for Accounting PhDs American Accounting Association PhD Supply/Demand Resource Page A collection of resources, links, and reports related to the pipeline of future Accounting faculty. Highlights include: Report of the AAA/APLG Committee to Assess the Supply and Demand of Accounting PhDs Link to the Doctoral Education Resource Center of AACSB International (Association to Advance Collegiate Schools of Business) AICPA's Journal of Accountancy's article "Teaching for the Love of It" Deloitte Foundation Accounting Doctoral Student Survey Survey Results (Summer, 2007) Data collected by survey of attendees of the 2007 AAA/Deloitte J. Michael Cook Doctoral Consortium The PhD Project and Accounting Doctoral Students Association The PhD Project is an information clearinghouse created to increase the diversity of business school faculty by attracting African Americans, Hispanic Americans and Native Americans to business doctoral programs and by providing a network of peer support. In just 12 short years, the PhD Project has been the catalyst for a dramatic increase in the number of minority business school faculty—from 294 to 842, with approximately 380 more candidates currently immersed in doctoral studies. The PhD Project Accounting Doctoral Students Association is a voluntary association offering moral support and encouragement to African-American, Hispanic-American, and Native American Accounting Doctoral Students as their pursue their degrees and take their places in the teaching and research profession, and serve as mentors to new doctoral students. PhD Project Surveys of Students, Professors, and Deans Results of a survey among students to understand the impact of minority professors on minority and non-minority students. Accounting Firms Supporting the AAA and Accounting Programs, Faculty, and Students Deloitte Foundation Ernst & Young Foundation Grant Thornton KPMG Foundation PricewaterhouseCoopers Foundation Related Organizations Sharing Interest in Accounting Faculty and Programs AACSB International – Association to Advance Collegiate Schools of Business ACBSP – Association of Collegiate Business Schools and Programs American Institute of Certified Public Accountants Association of Government Accountants Financial Executives International Institute of Internal Auditors Institute of Management Accountants TACTYC - Teachers of Accounting in Two-Year Colleges The PhD Project

 

Gender Profiles of Accountants in the USA

There are 1,762,000 accountants and auditors in the United States for the year 2008. They represent 1.2% of the total 145,362,000 employed Americans for the same year. 61.1% of American accountants and auditors are female while 10.2% are Asian. This data is based on the The 2010 Statistical Yearbook of the United States Census Bureau ---
http://infomory.com/numbers/number-of-accountants-in-the-us/
For updates see
https://www.census.gov/library/publications/time-series/statistical_abstracts.html
Note that not all "accountants" even go to college. especially those trained to do some accounting functions (think bookkeeping) on the job. To sit for the CPA examination virtually all candidates now must have five years (150 semester credits) including required courses in accounting, auditing, ethics, and business.

Eight Special Women of Accounting --- http://www.journalofaccountancy.com/Issues/2007/Aug/EightSpecialWomenInAccounting.htm

Among the AICPA-donated volumes at Ole Miss are two binders containing photographs of individuals appearing in the JofA or at accounting conventions from 1887 to 1979. Of the 446 individuals featured, eight are women—Christine Ross, Ellen Libby Eastman, Miriam Donnelly, Mary E. Murphy, Helen Lord, Helen H. Fortune, Mary E. Lewis and Beth M. Thompson. In a time when the profession was the all-but-exclusive domain of men, they stood out not only because of their gender but in many cases because of their accomplishments and contributions to accounting. Consider that in 1933, slightly more than 100 CPA certificates had been issued to women. By 1946, World War II had changed traditional notions of gender in the workplace, and female CPAs had more than tripled to 360—still a small contingent but, as information gleaned from the AICPA Library indicates, one capable of exerting a strong and beneficial influence on the profession.

Christine Ross
Born about 1873 in Nova Scotia, Ross took New York by storm in the late 1890s. New York state enacted licensure legislation in 1896 and gave its inaugural CPA exam in December 1896. Ross sat for the exam in June 1898, scoring second or third in her group. Six to 18 months elapsed while her certificate was delayed by state regents because of her gender. But she had completed the requirements and became the first woman CPA in the United States, receiving certificate no. 143 on Dec. 21, 1899.

Ross began practicing accounting around 1889. For several years, she worked for Manning’s Yacht Agency in New York. Her clients included women’s organizations, wealthy women and those in fashion and business.

Helen Lord
Lord received her CPA certificate from New York in 1934 and in 1935 joined the American Society of Certified Public Accountants, which merged with the American Institute of Accountants (later AICPA) the following year. In 1937, she was a partner with her father in the New York firm of Lord & Lord and a member of the AIA. She served in the late 1940s as business manager of The Woman CPA, published by the American Woman’s Society of Certified Public Accountants–American Society of Women Accountants. Lord reported the journal then had a circulation of more than 2,200.

Helen Hifner Fortune
Fortune, one of the first women CPAs in Kentucky, received certificate no. 174 in 1935 and was admitted to the AIA the following year. She became a member of an AIA committee in 1942 and by 1947 was a partner in the Lexington, Ky., firm of Hifner and Fortune.

Ellen Libby Eastman
Eastman began her career as a clerk in a Maine lumber company, eventually becoming chief accountant. She studied for the CPA exam at night and became the first woman CPA in Maine, receiving certificate no. 37 dated 1918. She was also the first woman to establish a public accounting practice in New England. Arriving in New York in 1920, Eastman focused on tax work and audited the accounts of the American Women’s Hospital in Greece. In 1925, she was a member of the ASCPA. In 1940, Eastman began working with the law firm of Hawkins, Delafield & Longfellow in New York.

She was outspoken and eloquent regarding a woman’s ability to succeed in accounting. In a 1929 article in The Certified Public Accountant, Eastman recounted her adventures:

One must be willing and able to endure long and irregular hours, unusual working arrangements and difficult travel conditions. I have worked eighteen out of the twenty-four hours of a day with time for but one meal; I have worked in the office of a bank president with its mahogany furnishings and oriental rugs and I have worked in the corner of a grain mill with a grain bin for a desk and a salt box for a chair; I have been accorded the courtesy of the private car and chauffeur of my client and have also walked two miles over the top of a mountain to a lumber camp inaccessible even with a Ford car. I have ridden from ten to fifteen miles into the country after leaving the railroad, the only conveyance being a horse and traverse runners—and this in the severity of a New England winter. I have done it with a thermometer registering fourteen degrees below zero and a twenty-five mile per hour gale blowing. I have chilled my feet and frozen my nose for the sake of success in a job which I love. I have been snowbound in railroad stations and have been stranded five miles from a garage with both rear tires of my car flat. I have ridden into and out of open culvert ditches with the workmen shouting warnings to me. And always one must keep the appointment; “how” is not the client’s concern.
 

Mary E. Murphy
A long-lived pioneer, Murphy (1905–1985) lectured, researched and taught in the United States and abroad, retiring in 1973. The Iowa native earned her bachelor of commerce degree with a major in accounting from the University of Iowa in 1927, then obtained a master’s in accountancy in 1928 from Columbia University Business School. In 1938, she received a doctorate in accountancy—only the second woman in the United States to do so—from the London School of Economics.

In 1928, Murphy began working in the New York office of Lybrand, Ross Bros. & Montgomery. Two years later, she took the CPA exam in Iowa and received certificate no. 67, to become the first woman CPA in Iowa. She joined the AIA in 1937.

Following her public accounting stint, she served for three years as the chair of the Department of Commerce at St. Mary’s College in Notre Dame, Ind. Murphy also was an assistant professor of economics at Hunter College of the City University of New York until 1951. In 1952, she received the first Fulbright professorship of accounting, with assignments in Australia and New Zealand. In 1957, she was appointed as the first director of research of the Institute of Chartered Accountants in Australia. Murphy retired in 1973 from the accounting faculty at California State University.

She published or collaborated on more than 20 books and 100 journal articles and many book reviews and scholarly papers. From 1946 to 1965 she was the most frequently published author in The Accounting Review. Murphy investigated the role of accounting in the economy, made the case for accounting education improvements and paved the way for other aspiring women accountants to prosper. More than half her publications explored international accounting, often advocating standardization. She also emphasized accounting history and biographies.

Mary E. Lewis
Lewis received California CPA certificate no. 1404 in 1939. She was admitted to the AIA that year and by 1947 had her own firm in Los Angeles.
 

Beth M. Thompson
Thompson worked as the office manager in the Kentucky Automobile Agency she and her husband, Charles R. Thompson, owned. After closing the car business, they moved to Florida, where she worked for an accounting firm. She passed the CPA exam in 1951 with the encouragement of her husband and opened her own accounting business in Miami. In 1955, Thompson was one of only 900 women CPAs and the only female president of a state association chapter—the Dade County chapter of the Florida Institute of CPAs.

Miriam Donnelly
From 1949 to 1955, Donnelly was head librarian of the AIA library. (In 1957, the AIA was renamed the AICPA.) She began her career with the library as assistant librarian and cataloger in 1927, after working for two governmental libraries and the New York Public Library.

 

History of women accountants in the 1880. US Federal Census ---
http://repository.usfca.edu/cgi/viewcontent.cgi?article=1001&context=acct

Christine Ross (The First Woman CPA) --- Click Here
http://books.google.com/books?id=W8Z2a53DJ2cC&pg=PA151&lpg=PA151&dq=%22First+Woman+CPA%22&source=bl&ots=irXssMWzFN&sig=0AneWv1qO-MB6_ixatHq-mMerRQ&hl=en&sa=X&ei=N8o8UY3XBYrK0AHngoCYBw&ved=0CDgQ6AEwAQ#v=onepage&q=%22First%20Woman%20CPA%22&f=false

Mary Jo McCann (First Woman CPA in Kansas) ---
http://www.kscpa.org/about/news/119-mary_jo_mccann_first_woman_cpa_in_kansas_passes

Bertha Aldrich (First Woman CPA in California) --- http://boards.ancestry.com/surnames.aldrich/600/mb.ashx

Accounting Reform (search for women) --- http://en.wikipedia.org/wiki/Accounting_reform

American Society of Women Accountants --- http://en.wikipedia.org/wiki/University_of_Cambridge#Women.27s_education

Accounting and Financial Women's Alliance --- http://www.afwa.org/

Accounting History Libraries at the University of Mississippi (Ole Miss) --- http://www.olemiss.edu/depts/accountancy/libraries.html
There are many items pertaining to accounting women in history, especially in the Accounting Historians Journal

Ruth Andersen, First Woman on the Board of a Big Four Accounting Firm --- http://en.wikipedia.org/wiki/Ruth_Anderson_%28accountant%29

Cynthia Cooper (Internal auditor who blew the whistle at WorldCom) --- http://en.wikipedia.org/wiki/Cynthia_Cooper_%28accountant%29

Lynn Brewer was never enough of a player to even mention in my threads on the Enron scandal
The foul mouthed Sherron Watkins was the significant whistleblowers at Enron
http://faculty.trinity.edu/rjensen/FraudEnronQuiz.htm#10

Grace Andrews (early mathematician and accountant in Barnard College) --- http://en.wikipedia.org/wiki/Grace_Andrews_%28mathematician%29

Patricia Courtney (IRS agent and professional baseball star) --- http://en.wikipedia.org/wiki/Patricia_Courtney

Patrecia Barringer (Tax accountant, auditor, and professional baseball star) ---http://en.wikipedia.org/wiki/Patricia_Barringer

Helen Nordquist (Telephone operator, accountant, and professional baseball star) --- http://en.wikipedia.org/wiki/Helen_Nordquist

Rita Lee (Accounting Student Tennis Star) --- http://en.wikipedia.org/wiki/Janet_Lee

Diane Cummins (Canadian Accountant Track Star) --- http://en.wikipedia.org/wiki/Diane_Cummins

Sue Hearnshaw (British Chartered Accountant and Long Jump Star) --- http://en.wikipedia.org/wiki/Sue_Hearnshaw

Betty Wagner Spandikow (Accountant Who Became an Advocate of Breast Feeding) --- http://en.wikipedia.org/wiki/Betty_Wagner_Spandikow

Jennifer Archer (Oil and Gas Accountant Turned Fiction Writer) --- http://en.wikipedia.org/wiki/Jennifer_Archer

'Death by a Thousand Cuts': Why Are Women Leaving Big Law? ---
https://www.law.com/americanlawyer/2019/11/14/death-by-a-thousand-cuts-why-are-women-leaving-big-law-405-48434/?slreturn=20200429140136

U.S. Chapter 11 bankruptcy filings surge in May ---
https://www.reuters.com/article/us-health-coronavirus-bankruptcy/u-s-chapter-11-bankruptcy-filings-surge-in-may-idUSKBN23B2K3
Jensen Comment
It will be hard for many businesses to recover from bankruptcy. Exhibit A is  a bankrupt restaurant with the cost of food soaring and revenues declining due to social distancing where perhaps only half as many diners can be legally served at any point in time. Add to this regions dependent upon tourism with almost no tourists. Sure menu prices can be increased, but price increases are not a good way to attract customers when the pandemic lockdowns are lifted while unemployment remains at double digits.

Particularly hard hit will be businesses (think food, electronics, fueling stations, and drug stores)  in urban riot zones where there's now greater fear of being looted and burned out with reduced police protection in the future. Exhibit A is St. Louis and other cities that tell police not to arrest looters since looters, like shoplifters, will no longer be punished. Minority people underserved with stores in the past will be even more underserved in the future without police protection of their stores from looters and shoplifters and even arsonists.

The Atlantic:  Defund the Police  ---
https://www.theatlantic.com/ideas/archive/2020/06/defund-police/612682/

Gun sellers must be overjoyed!

Interior Secretary: Park Police Were in 'State of Siege' ---
https://www.blabber.buzz/conservative-news/909138-interior-secretary-park-police-were-in-state-of-siege-special?utm_source=c-alrt&utm_medium=c-alrt-email&utm_term=c-alrt-GI&utm_content=697zxgAhCmuHg4vas74EBzlnoWM3eNVp0oCrhLuQnY-I.A
Let's defund the Park Police

May 2020:  U.S. mortgage rates tumble to a record 3.15% for 30-year loans ---
https://www.bnnbloomberg.ca/u-s-mortgage-rates-tumble-to-a-record-3-15-for-30-year-loans-1.1442291

Mortgage Payment Calculator --- https://www.mortgagecalculator.org/
PMI means private mortgage insurance --- https://en.wikipedia.org/wiki/Lenders_mortgage_insurance
For loan comparisons only, feed in zero for property taxes, PMI, and insurance
I link to this only as a calculator (not a sales promotion)
Rates may vary for local mortgage lenders and this calculator does not include loan or refinance origination fees (that vary with lenders)

New Technologies And The Evolution Of Tax Compliance ---
https://taxprof.typepad.com/taxprof_blog/2020/05/new-technologies-and-the-evolution-of-tax-compliance.html#more

GASB proposes accounting guidance for CARES Act aid ---
https://www.journalofaccountancy.com/news/2020/jun/gasb-accounting-guidance-cares-act-coronavirus-aid.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=12Jun2020

SEC doles out record $50 million to whistleblower, pushing program total above $500 million ---
https://markets.businessinsider.com/news/stocks/sec-record-millions-whistleblower-award-program-total-payment-amount-payout-2020-6-1029282473

JC Penney is closing 154 stores for good — here's the list ---
https://www.businessinsider.com/jcpenney-closing-stores-list-addresses-2020-6

Excel:  Analyzing Future Cash Flows in Excel
https://www.fm-magazine.com/news/2020/apr/model-working-capital-adjustments-in-excel.html?utm_source=mnl:globalcpa&utm_medium=email&utm_campaign=20May2020&SubscriberID=119191126&SendID=280485

https://www.fm-magazine.com/news/2020/may/microsoft-excel-analyse-future-cash-flow.html?utm_source=mnl:cpald&utm_medium=email&utm_campaign=27May2020

EY:  Technical Line: Accounting for rent concessions related to the COVID-19 pandemic under ASC 840 ---
https://www.ey.com/en_us/assurance/accountinglink/technical-line---accounting-for-rent-concessions-related-to-the-0

Entities that provide or receive rent concessions due to the COVID-19 pandemic need to consider whether to make an election provided by the FASB staff to not evaluate whether a rent concession is a change in the provisions of the lease. Entities that make this election then need to decide whether to apply the guidance in ASC 840 on accounting for a change in lease provisions to the concession or account for the concession as if it were contemplated as part of the existing contract. Entities that don’t make the elections may find it operationally challenging to evaluate the rights and obligations of each contract and apply the guidance on accounting for a change in lease provisions to leases if a concession was not contemplated in the existing lease.

Continued in Article

From the CFO Journal's Morning Ledger on June 12, 2020

A strong planting season for U.S. corn is expected to lead to a record-high supply, as demand for the crop remains muted thanks to the fallout from the coronavirus pandemic.

Ending stocks of corn—unsold corn left over after the marketing year is done—are expected to total 3.32 billion bushels in 2020-21, the U.S. Department of Agriculture said in its monthly supply and demand estimate report. That figure is 58% higher than last year’s ending stocks, according to USDA data.

Jensen's Suggested Assignments for Accounting Students

After having students debate corn price hedging of purchased options versus futures contracts have students compare the hedge accounting differences of purchased options versus futures contracts.
Have students in particular focus on the differences in risk when speculating (not hedging) using purchased options versus futures contracts.

Then ask them where ineffectiveness arises in corn price hedging and how hedging ineffectiveness affects hedge accounting.

Next have them compare the hedge accounting differences between corn inventory fair value hedging versus cash price hedging.

Bob Jensen's free tutorials on accounting for derivative financial instruments and hedge accounting ---
http://faculty.trinity.edu/rjensen/caseans/000index.htm

From the CFO Journal's Morning Ledger on June 11, 2020

The European Union plans to file formal antitrust charges against Amazon over the e-commerce company’s treatment of third-party sellers, according to people familiar with the matter.

The charges could be officially filed as early as next week or the week after, one of the people said. The European Commission, the bloc’s top antitrust regulator, has been honing its case, and the case team has been circulating a draft of the charge sheet for a couple of months, another person said.

The formal charges would be the commission’s latest step in a nearly two-year probe into Amazon’s alleged mistreatment of sellers that use its platform. The charges—called a statement of objections—stem from Amazon’s dual role as a marketplace operator and a seller of its own products, the people said. In them, the EU accuses Amazon of scooping up data from third-party sellers and using that information to compete against them, for instance by launching similar products

Jensen Comment
 It seems to me that the EU will go after any USA company that's operating successfully in Europe --- just because they are American.

From the CFO Journal's Morning Ledger on June 8, 2020

Good morning. After two months of carnage, companies added more jobs in May than in a single month on records dating from 1948. The jobs report boosted hopes that the economy has moved beyond the worst fallout from the coronavirus pandemic and may recover more quickly than expected.

Economists attributed the increase in U.S. jobs to both relaxed business restrictions in some states and government payments to companies that rehired workers. But they still expect a slow and choppy recovery. Government aid programs for businesses will start to run out this summer and fall. Still, a significant number of Americans appear ready to come back to the marketplace.

Among goods-producing industries, manufacturing showed strong gains. In the services category, jobs in food services and drinking places accounted for about half of the gain in total nonfarm employment.  A study released last month found that work-related mobility dropped notably after the imposition of a stay-at-home order, and unemployment-related Google searches rose sharply after the closure of nonessential businesses. Initial claims for unemployment insurance rose sharply immediately after stay-at-home mandates. Weaker employment is correlated with stay-at-home mandates and business closures.

Quantitative Easing --- https://en.wikipedia.org/wiki/Quantitative_easing

From the CFO Journal's Morning Ledger on June 5, 2020

The European Central Bank aggressively scaled up its bond-buying program to €1.35 trillion ($1.52 trillion), a bold move that eases pressure on the region’s embattled governments and puts the ECB’s stimulus effort in line with that of the Federal Reserve.

From the CFO Journal's Morning Ledger on June 4, 2020

A former United Auto Workers president pleaded guilty to embezzlement of union funds and racketeering, marking the highest-profile conviction yet in the government’s yearslong investigation into labor corruption within the auto industry.

From the CFO Journal's Morning Ledger on June 3, 2020

Good morning. Some grocers, food manufacturers and restaurant chains weathered the supply-chain disruption in recent months in part because they use a common hedging practice: Locking in beef prices and quantities of meat purchases months in advance.

Costco Wholesale and Jack in the Box are among the companies that have said they negotiate prices of some supplies in advance, providing finance chiefs with a forward look on costs. The practice became a key tool for these companies after the pandemic disrupted the U.S. meat supply and prices soared.

Costco is locking in some prices with suppliers, Chief Financial Officer Richard Galanti said. He declined to provide specifics on how much of Costco’s supplies come with pre-agreed prices but said the operator of members-only warehouse stores would lock in prices for weeks or months at a time. “It’s not unlike locking in currencies,” Mr. Galanti said. He said he expects overall food prices to come down as supply shortages ease.

Hormel Foods, the maker of Spam and other food products, relies on forward prices for a limited amount of pork, its finance chief, Jim Sheehan, said. “We wouldn’t go in and lock in all the cost of pork,” Mr. Sheehan said. “We would have a balance between contracted prices, open-market prices and then operating costs.”

Jensen Comment'

A learning assignment that might be given to students is to have them examine the most common hedging contracts (e.g., purchased options, forwards, or futures) and have them explain how "net settlement" means that all parties to a hedge contract do not have to buy or ship actual meat products to be part of hedging or speculation in derivatives contracts.

Then have students explain how both hedging and hedge accounting varies under the different types of hedging contracts and under different the types of price movements. In particular, explain how risk varies such as how options buyers have capped their potential losses while options sellers (writers) have greater risks under some circumstances.

Make students understand why hedge accounting is deemed so important to hedgers and how they might lose parts of it for hedging contracts that are partly ineffective. Reasons for ineffectiveness include hedging meat purchases in California with options contracts purchased in Chicago derivatives markets such as the CBOT.

Bob Jensen's free tutorials on accounting for derivative financial instruments and hedging activities ---
http://faculty.trinity.edu/rjensen/caseans/000index.htm

From the CFO Journal's Morning Ledger on June 2, 2020

Good morning. Companies are locking in current low interest rates for future bond sales, hoping to benefit from cheap refinancing costs when their debt comes due.

As finance chiefs and treasurers struggle to project an outlook for the coming quarter in the wake of the coronavirus pandemic, being able to quantify the cost of borrowing in the years ahead can guide them as they look at their companies’ debt-maturity schedule, CFO Journal reports.

Businesses including online marketplace eBay and animal-health company Zoetis Inc. disclosed in recent weeks that they entered into such rate locks on future debt—called pre-issuance hedges—with banks and other financial institutions. While the banks earn a fee for their service, companies potentially save money if rates go up in the meantime.

Jim Chapman, the finance chief of Richmond, Va.-based Dominion Energy Inc., in March locked in rates for about $1 billion in bond issuances planned for between now and 2027. Mr. Chapman, who refinances several billion in bonds a year, didn’t hedge the full amount of what he plans to sell in debt, but a significant proportion. “If rates go to zero in the next seven years, we will have lost money,” he said. “If rates go up, we can still raise funds at around 1%. We think the upside in securing the 1% is bigger than the potential cost."

From the CFO Journal's Morning Ledger on June 1, 2020

Rising tensions between the U.S. and China over Hong Kong have American businesses caught in the crossfire.

After China last week approved a plan to impose new national-security laws on Hong Kong, President Trump on Friday said the U.S. would no longer treat Hong Kong as a separate entity from China and would roll back policy exemptions for the city. They could include measures such as export controls, tariffs and visa restrictions, according to analysts, but businesses will have to wait for details and the timing of any moves.

About 85,000 U.S. citizens work in the city, with more than 1,300 U.S. companies operating here, some with regional headquarters. American companies with offices in Hong Kong range from Apple to Procter & Gamble and FedEx.

·        Tencent Rival NetEase Moves Ahead With Hong Kong Listing

From the CFO Journal's Morning Ledger on May29, 2020

The International Accounting Standards Board granted temporary relief  to companies accounting for rent concessions they received on leases due to the coronavirus pandemic.

Thursday’s amendment to an IASB 2016 standard on leases, effective immediately, exempts companies from having to consider whether temporary rent freezes or reductions qualify as lease modifications.

From the CFO Journal's Morning Ledger on May28, 2020

General Electric is getting out of the business of making lightbulbs, selling a unit that defined the company for nearly a century and was its last direct link to consumers.

From the CFO Journal's Morning Ledger on May28, 2020

Boeing intends to shed more than 13,000 employees, the plane maker said, including the first round of compulsory cuts as part of previously announced plans triggered by the coronavirus-driven collapse in global air travel.

The company said it had completed its voluntary-layoff program after offering staff buyouts last month, with several thousand more jobs set to go under compulsory cuts over the next several months. They mark the first major reductions by the company since 2017, when it laid off roughly 1,500 workers as part of a wider cost-cutting drive.

Meanwhile, American Airlines will cut its management and administrative staff by 30% as the airline prepares to shrink.

American is among the airlines that have reported a signs of a pickup in demand after government travel bans, stay-at-home orders and fears of infection brought travel to a near halt in March and April. But the modest gains won’t be enough to save thousands of industry jobs.

IMA Cases, Volume 13 Issue 1, 2020 ---
https://www.imanet.org/educators/ima-educational-case-journal/iecj-index/2020/iecj-issue-page?ssopc=1
These cases are not free

Volume 13 Issue 1

IMA Educational Case Journal

ISSN 1940-204X

Articles

Activity-Based Costing and the Evaluation of Customer Profitability: A Case Study

David M. Bukovinsky, Ph.D., CPA (inactive)
Department of Accountancy
Wright State University

 

THIS CASE EXAMINES THE USE OF ACTIVITY-BASED COSTING (ABC) and other accounting tools to assess the profitability of individual customers of Carolina Creations, a small furniture-manufacturing business. The company was expanding, new customers were attracted, and sales were increasing. Yet profitability was declining. The company’s founder, Richard Bachon, was concerned that the company was acquiring too many customers too fast, without regard to whether the customers were profitable. Richard ordered his directors of accounting and marketing to devise methods for evaluating the profitability of individual customers. He hoped that greater insight could lead to improved pricing methods and practices for managing customers. Students are provided basic information about the activities related to serving customers and are required to develop tools to help management better understand the costs of serving customers.
 

Keywords: Activity-based costing, customer analysis, cost allocation, common-size statements, ratio analysis.

Sea Pines Villa: Are They Ready For The Big One?

Margaret N. Boldt, Ph.D., CMA
Department of Accounting and Finance
Southeastern Louisiana University
 

SEA PINES VILLA (SPV) INTRODUCES STUDENTS (undergraduates and graduates) to cash budgeting and its importance in disaster-recovery plans. The setting is based on a real company and operating environment, and provides students with an opportunity to explore how uneven cash receipts affect the cash budget. The case describes how this coastal vacation property rental and management company earns revenues and receives cash, as well as the timing and behavior of costs and payments. Students prepare a cash budget for three months and determine whether the company has sufficient cash to survive a disaster. Students also create a disaster-recovery plan that includes preventive and action steps for the hours immediately preceding (if possible) and following a disaster.
 

Keywords: Cash, budgeting, disaster-recovery plan, business continuity.

Kilgors Wine Division: A Balanced Scorecard Simulation

Albie Brooks
Department of Accounting
University of Melbourne, Australia

Gillian Vesty
School of Accounting
RMIT University, Australia

Margaret Shackell School of Business
Ithaca College, USA

 

THE WINE DIVISION OF KILGORS IS beginning development of a new performance management framework using balanced scorecard (BSC) technologies. To date, they have developed a portfolio of measures for possible inclusion in the division scorecard. Industry experts have provided Kilgors’ management with insight regarding industry developments, and the CEO, CFO, and Wine Division manager are motivated to ensure the firm’s and division’s strategies are captured in improved performance evaluation and management control. The Wine Division operates in a dynamic environment and has recently been challenged by uncertain market conditions that have raised questions about internal operations and practices. The CEO is intent on proactive, rather than reactive, management responses.
At this stage, Lee recognizes that she needs guidance from someone with management accounting expertise in further developing and refining the BSC. She also recognizes that planning for disruptions and market threats will be an integral part of this strategic planning process.
 

Keywords: Balanced scorecard (BSC), simulation, wine industry, performance measurement.

Target Costing Decisions at BMA AG

Marc Wouters, Ph.D.
Professor of Management Accounting
Karlsruhe Institute of Technology (KIT)
University of Amsterdam
 

THIS CASE ADDRESSES TARGET COSTING at a German premium car company, BMA AG. It is based on many examples that have been anonymized and blended, making the extended description of target costing in practice a valuable part of this case. The case focuses on target costing in a context with complex supply chains, huge product-development expenses, long lead times of product-development projects, complex tradeoffs between different targets, and large product portfolios. The assignments do not require conducting detailed calculations but focus on qualitatively discussing decision-making based on target costing and developing extensions of target costing to adapt it to this context.
 

Keywords: Target costing, car industry, product development, R&D costs, parts commonality.

Teaching Case From The Wall Street Journal Weekly Accounting Review on May 29, 2020 2020

FASB Delays New Accounting Rules for Some Private Companies, Nonprofits By Mark Maurer | May 20, 2020

Topics: Due Process , FASB Summary: This article follows on one from April 8, 2020, covered in this Review, which addressed the announcement that the Financial Accounting Standards Board (FASB) tentatively decided to delay implementation of ASU 2014-09, Revenue Recognition from Contracts with Customers, and ASU 2016-02, Leases, for certain entities which had not already implemented these new standards. “The Financial Accounting Standards Board extended the implementation period for new accounting rules on revenue recognition and leases for certain companies to give them more time to address the impact of the coronavirus pandemic…the proposed relief related to revenue recognition was initially limited to private franchisers only.” Classroom Application: The article may be used in a financial reporting class to discuss the FASB’s due process for implementing accounting standards. Even a standard as straightforward as extending the implementation dates for certain entities must follow these due process procedures. Questions 1-5 may be used in Intermediate level classes and above; later questions are appropriate for advanced undergraduate or graduate level work. Questions: ·        According to the article, when has implementation of the new revenue recognition standard been required? The new lease accounting standard? ·        The initial proposal to implement this delay was issued in April. According to this article, how was the delay of the revenue recognition standard expanded beyond the initial proposal? ·        What steps are required for companies and nonprofit entities to implement new accounting standards? Why are these steps particularly challenging during the Covid-19 outbreak? ·        What is the FASB’s due process for implementing accounting standards? Cite your source for this information (Hint: One source can be found by accessing fasb.org/home and clicking on About Us). ·        Why do you think the FASB must follow these due process procedures just to delay the implementation of these standards for certain entities during the impact of the Covid-19 pandemic? ·        Access the FASB’s Tentative Board Decisions form the May 20 meeting at which the decision announced in this article was made. https://www.fasb.org/cs/ContentServer?c=FASBContent_C&cid=1176174644728&d=&pagename=FASB%2FFASBContent_C%2FActionAlertPage What was the purpose of the meeting? ·        Access the Board Meeting Handout for the May 20 FASB meeting. It is available at https://www.fasb.org/cs/ContentServer?c=Document_C&cid=1176174643275&d=&pagename=FASB%2FDocument_C%2FDocumentPage How many comment letters were received by the FASB from constituents on the proposals to delay implementation of these standards? Were they generally in favor of this proposal or not? Were there concerns expressed? State where in the document you find this information.

Read the Article

Reviewed By: Judy Beckman, Ph.D., CPA, University Of Rhode Island (Uri)

 

"FASB Delays New Accounting Rules for Some Private Companies, Nonprofits," by Mark Maurer, The Wall Street Journal, May 20, 2020
https://www.wsj.com/articles/fasb-delays-new-accounting-rules-for-some-private-companies-nonprofits-11590005006

Move by U.S. accounting standard-setter is aimed at giving companies more time as they grapple with impact of coronavirus

The Financial Accounting Standards Board extended the implementation period for new accounting rules on revenue recognition and leases for certain companies to give them more time to address the impact of the coronavirus pandemic.

To carry out accounting changes, private companies often rely on technology investments or additional staffing. The pandemic has disrupted allocations of some of those resources, FASB Chairman Russell Golden said.

The FASB sets accounting rules for U.S. companies and nonprofits.

Private companies or nonprofits that haven’t yet adopted the new revenue-recognition standard could delay adopting it by one year, the FASB said Wednesday. The revenue-recognition standard streamlines how companies account for revenue from sales and services.

Implementation of the standard for those companies will be delayed to annual reporting periods beginning after Dec. 15, 2019.

Private companies and all nonprofits also will have the option to defer by one year the effective date of a standard that requires companies to place operating leases on their balance sheets.

Implementation of the leasing standard for private companies and private nonprofits will be pushed back to fiscal years beginning after Dec. 15, 2021. For public nonprofits, the effective date for the leasing rules will be pushed to fiscal years starting after Dec. 15, 2019.

The FASB said it plans to issue documents detailing the new timetables in early June, making them official.

The proposed relief related to revenue recognition wasinitially limited toprivate franchisers only. The FASB agreed Wednesday to expand the relief to other private entities.

Wednesday’s meeting marked one of the last rule votes under Mr. Golden, whose term ends June 30. Richard Jones, most recently Ernst & Young’s chief accountant, is expected to succeed him on July 1.

Continued in article

Teaching Case From The Wall Street Journal Weekly Accounting Review on May 29, 2020 2020

Ford’s Chicago Plant Stops Production for Second Straight Day By Ben Foldy Mike Colias | May 20, 2020

Topics: Industrial Production , Cost Basis , Coronavirus Summary: After re-starting production following a two-month shut down, Ford Motor Co. was forced to stop assembly lines at factories in Chicago and Michigan due to the impacts of the coronavirus pandemic. The Chicago plant was shut down twice because of two confirmed Covid-19 cases among workers at a nearby parts-assembly plant. A Ford worker at the Dearborn Michigan plant tested posted for Covid-19; the plant was shut down for disinfection and was re-opened on Wednesday, May 20, 2020. Classroom Application: The article may be used in a managerial accounting course to discuss procedures to resume production while also limiting the spread of the coronavirus. Questions focus on measuring cost and profitability of one type of Ford vehicle. Questions: ·        One of the vehicles made by Ford at the plant locations that are the first to come back into production is described in the article as the most profitable vehicle. Which vehicle is it? Why does it make sense that Ford would resume production of this vehicle first as the company tries to emerge from the effects of the coronavirus pandemic? ·        How does Ford identify the cost and profitability of a particular vehicle model? Specifically describe the managerial cost information used to make this assessment. ·        Do you think that cost and profitability of this vehicle model will change due to the impact of the coronavirus pandemic? Explain your answer including the impact, or non-impact, on specific cost components.

Read the Article

Reviewed By: Judy Beckman, Ph.D., CPA, University Of Rhode Island (Uri)

 

"Ford’s Chicago Plant Stops Production for Second Straight Day By Ben Foldy Mike Colias | May 20, 2020 , The Wall Street Journal,
https://www.wsj.com/articles/ford-reports-two-coronavirus-cases-at-factory-11589993052

Factory, which makes Ford Explorer SUVs, shuts down after nearby supplier suspends production

Ford Motor Co. F -2.39% stopped assembly lines at key factories in Chicago and Michigan on Wednesday, the latest sign of the risks to companies and their employees as they attempt to resume work during the Covid-19 outbreak.

Ford sent Chicago Assembly Plant workers home for a second day in a row late Wednesday morning, a company spokeswoman said. The work stoppage came after a Lear Corp. LEA -1.47% factory in nearby Hammond, Ind., that makes seats for the Ford factory idled its assembly lines, people familiar with the matter said.

Also Wednesday, Ford temporarily closed a pickup-truck plant in Dearborn, Mich., near its corporate headquarters, after a worker at the plant tested positive for Covid-19, the company spokeswoman said. Work is expected to resume Wednesday night after part of the factory is disinfected, she said.

The Dearborn plant is one of two factories that make the F-150 pickup, Ford’s biggest moneymaker. The Chicago plant makes the Ford Explorer sport-utility vehicle, one of the company’s most popular models, along with the Lincoln Aviator SUV.

On Tuesday, Ford was forced to close the Chicago factory twice for several hours after confirming two positive cases of Covid-19 at a nearby parts-assembly facility, the company spokeswoman said. The main assembly plant was back in operation by Wednesday morning after both facilities were disinfected overnight.

The spokeswoman said the company believes the workers already were infected when they returned to the job this week.

“Due to incubation time, we know these employees did not contract Covid-19 while at work,” the spokeswoman said. “Our protocols are in place to help stop the spread of the virus.”

Texts sent to employees at the Lear plant and viewed by The Wall Street Journal said that a first-shift employee tested positive for Covid-19. The facility has since been disinfected and the night shift is to report as scheduled, the texts said.

The worker told the company of the test result and has been instructed to self-quarantine, as have those who came into contact with the worker, a Lear spokesman said. The facility stopped production to be cleaned and disinfected in accordance with the company’s health and safety policies, the spokesman said.

The closures come after Detroit’s auto makers on Monday began restarting their U.S. factories, which were idled around March 20 as the coronavirus pandemic took hold. The companies have spent several weeks preparing measures to ensure a safe work environment. They include temperature checks, plastic barriers between work stations and even electronic bracelets that beep if an employee violates social-distancing rules.

Executives and analysts have warned that the industry’s restart will be slow and complex, including the risk of infections popping up at auto makers’ factories and at those of suppliers.

The car companies have resumed operations with far fewer workers making vehicles in extremely small volumes as they gradually resume operations. Executives have said production will start slowly as workers familiarize themselves with safety measures, parts trickle in from suppliers and machinery is tested after the long idle period.

Continued in article

Teaching Case From The Wall Street Journal Weekly Accounting Review on May 29, 2020

Companies’ Financial Planning Comes Up Short in the Coronavirus Era By Mark Maurer Nina Trentmann | May 24, 2020

Topics: Financial Planning , Coronavirus , FP&A Summary: The article discusses the breadth of the impact of the coronavirus outbreak on the functions in corporate Financial Planning & Analysis (FP&A). Descriptions of several U.S. companies’ expectations regarding recovery (e.g., a “swoosh” shape or otherwise), breadth of the pandemic’s impact on functions across the company and thus in FP&A modeling processes, and worst-case scenario planning are discussed. Classroom Application: The article may be used to discuss the role of financial planning and analysis (FP&A). Questions carry students to the website for Certified Corporate FP&A Professionals https://fpacert.afponline.org/. Questions: ·        What is the role of financial planning and analysis in corporate entities? Besides gleaning information from the article, you may access https://fpacert.afponline.org/ then click on the right-hand side of the banner, “Why the FP&A”, then “What is FP&A.” ·        What FP&A functions are impacted by the coronavirus outbreak? List all that you find in the article. ·        What assumptions used by FP&A departments are impacted by the breadth of the coronavirus outbreak? ·        What actions by corporate chief executive officers and chief financial officers have resulted from these challenges to FP&A functions during the coronavirus outbreak? ·        Consider the discussion in the article relative to its title: do you think that the financial planning and analysis conducted in corporations is “coming up short”? Explain your viewpoint.

Read the Article

Reviewed By: Judy Beckman, Ph.D., CPA, University Of Rhode Island (Uri)

 

"Companies’ Financial Planning Comes Up Short in the Coronavirus Era," by Mark Maurer Nina Trentmann, The Wall Street Journal, May 24, 2020
https://www.wsj.com/articles/companies-financial-planning-comes-up-short-in-the-coronavirus-era-11590325200

Uncertainty surrounding the pandemic has rendered careful corporate planning exercises useless

To prepare for uncertainty, finance chiefs turn to scenario planning. They develop models to help quantify the effects of what-if situations involving cash flow, sales revenue and other metrics. However, the unprecedented nature of the coronavirus pandemic has complicated the practice, upending annual budgets and investment time lines, and rendering forward-looking guidance futile.

CFOs in recent weeks have set aside pre-existing plans or are treating them, at best, as a starting point. Some companies have opted to draw on the fallout of the 2008 financial crisis as a de facto worst-case scenario.

But unlike past crises, many executives find every element of their business under strain.

“You’ve got these great plans and as of yesterday, they’re completely meaningless,” said Brian Kalish, who consults on financial planning and corporate treasury issues.

As the pandemic drags on, finance chiefs across sectors are devoting more time and resources to examining a range of potential scenarios. They are also stress-testing business-continuity plans and trying to revise forecasts more frequently.

“We just don’t know what we’re facing,” said Mark George, chief financial officer of Norfolk, Va.-based railroad operator Norfolk Southern Corp.

Norfolk Southern last year started relying on stress-test scenarios to test its liquidity and gauge if it was positioned to deal with another crisis such as the 2008 downturn, Mr. George said. The company’s finance team imagined scenarios using varying multiples of revenue and then simulated the impact of that revenue on cash flow. Those exercises are helping the company evaluate possible outcomes, he said.

“Part of this is driven by, frankly, the PTSD we all have going back to the 2008 financial crisis,” he said.

Many CFOs, therefore, hesitate to stick to their predictions for the coming quarters. Sixty-two percent of S&P 500 companies have withdrawn or revised earnings guidance since April 1 because of the pandemic, according to research and advisory firm Gartner Inc.

Policy makers and company executives increasingly expect a swoosh-shaped recovery, denoting a large drop in the economic performance followed by a prolonged return. But economists continue to consider a variety of possibilities, such as a short collapse followed by a bounce back to pre-pandemic levels of activity, or a slower version of gross domestic product recovery.

“The world is going to be different in three, six and 12 months,” said Christopher Kastner, CFO of Newport News, Va.-based shipbuilder Huntington Ingalls Industries Inc. “Thinking through what’s going to be next, I know that’s hard to do and we’re challenged with it.”

The unpredictability has made even worst-case scenarios revolving around natural disasters seem suddenly manageable.

“A hurricane you can see the other side of, so it’s easier to plan when you’re going to come back up the other side and how you’re going to execute,” Mr. Kastner said.

As companies tighten their budgets, models and planning tools aren’t expected to undergo significant innovation. Businesses likely will continue to use planning tools they already have because it is very difficult to develop new tools in the midst of a crisis, said Bryan Lapidus, director of the financial planning and analysis practice for the Association for Financial Professionals.

Group 1 Automotive Inc., is examining scenarios covering a 12-month period, said CFO John Rickel. Its parts and services business division was particularly resilient during the 2008 financial crisis as people held on to their vehicles longer and needed repairs and service, but is facing declines now, he said.

 

The pandemic has pushed the Houston-based dealership chain to test out worst-case scenarios that would be worse than anything tested before the current crisis, Mr. Rickel said, such as a 30% to 40% decline in revenue for its parts and services division.

Group 1 is swiftly adjusting by focusing on the potential impact on costs, cash and loan agreements. It has developed a strategic plan to reduce capital spending and suspend its dividend, he said.

“You want to be in a position where if those more dire forecasts come through,” said Mr. Rickel, “you’re not putting the business at risk.”

 

Continued in article

Teaching Case From The Wall Street Journal Weekly Accounting Review on June 5, 2020 2020

Coronavirus Crisis Dents Salaries, Not Stock Awards, for Many CEOs By Chip Cutter Theo Francis | June 3, 2020

Topics: Equity Compensation , Coronavirus Summary: The article discusses strategies associated with changes in stock-based compensation plans for executives. “Most companies didn’t adjust 2019 compensation as the pandemic struck, even though it coincided with boards finalizing bonuses and equity awards, said Ira Kay, managing partner at consulting firm Pay Governance.” CEOs of publicly traded companies earned record compensation in 2019. Median cash salary was approximately $1.2 million while most cash compensation comes from bonuses; the median equity grant was valued at about $8.2 million. Base salaries, making up 8% to 10% of total S&P500 CEO pay, have been cut during the pandemic. Factors leading to this decision such as symbolic actions when workers are furloughed or facing reduced wages--contrasted with the need to motivate executives leading during these difficult times—are discussed in the article. Classroom Application: The article may be used when discussing stock- or equity-based compensation plans. Questions first focus on students considering required disclosures as the basis for the information analyzed in the article. Following that are questions considering the motivation impacts of equity-based compensation plans and external shocks beyond managers' control such as the coronavirus pandemic. Questions: ·        According to the article, what proportion of publicly-traded companies’ chief executives’ compensation comes from salaries? From equity-based compensation? In your answer, define the term equity-based compensation and describe the specific types discussed in the article. ·        From where does the Wall Street Journal obtain the information used for the analysis in this article? (Hint: tie your answer specifically to disclosure requirements described in your textbook or other accounting course materials.) ·        What is the purpose of offering compensation under equity-based plans rather than just cash salary? ·        What problems arise with that compensation system under times such as today when the coronavirus pandemic has generated an external shock beyond managers’ control? ·        Consider the case of Sonic Automotive Inc. as described in the article. On what basis did a vice president from advisory firm Glass Lewis criticize this company’s actions?

Read the Article

Reviewed By: Judy Beckman, Ph.D., CPA, University Of Rhode Island (Uri)

 

"Coronavirus Crisis Dents Salaries, Not Stock Awards, for Many CEOs," by Chip Cutter Theo Francis, The Wall Street Journal, June 3, 2020
https://www.wsj.com/articles/coronavirus-crisis-dents-salaries-not-stock-awards-for-many-ceos-11591197218

Companies cut cash for top executives, but few boards are making big pay changes as survival becomes a focus; 2019 was another record year

Hundreds of U.S. companies reduced salaries for their chief executives as the coronavirus pandemic swept across American business, a reversal for a group of leaders that until this year has ridden a bull market to record compensation.

Big-company CEOs had their richest paydays ever in 2019, a Wall Street Journal analysis shows. But in March and April many took large cuts to their salaries after the deadly virus crippled global commerce. For 2020, few so far changed the equity awards that make up the bulk of executive compensation and the value of which is tied to the stock market.

Unlike prior years, now “the question is not how much of an increase are we giving over the normal salary; it’s when do we even restore the old salaries,” said Robin Ferracone, CEO of compensation consulting firm Farient Advisors LLC.

One reason corporate boards have been slow to make bigger compensation changes: uncertainty over how long the economic slowdown will last, what its ultimate repercussions will be and how investors will react. After plunging, the stock market has rebounded from its March lows.

Median pay rose to $13.1 million in 2019 for the chief executives of 400 major companies reporting compensation details through May, a Wall Street Journal analysis found. Pay rose 8% or more for half the executives, while median investor returns reached 30%, a six-year high.

That was last year. This spring, as the coronavirus pandemic shut down operations, gutted revenues and sparked millions of layoffs, U.S. companies have reduced CEO pay. Many airlines, hotels and retailers have pulled their financial forecasts and said they would need to revisit executive performance targets. Nearly 600 companies in the Russell 3000 index have cut pay for top executives this year, according to data compiled by the Conference Board, Semler Brossy and Esgauge Analytics.

In the S&P 500, 102 companies have reduced base salaries for top executives as of May 22, the study found. Those taking cuts include the CEOs of companies as varied as engine maker Cummins Inc., CMI 2.97% Walt Disney Co. DIS 0.91% and McDonald’s Corp. MCD 2.03%

Of S&P 500 companies cutting pay, a third suspended CEO salaries entirely, while about half reduced salary by 50% or less, a separate analysis by the consulting firm Compensation Advisory Partners, or CAP, found. Most companies said the pay reductions would stand for several months, and many said they would last through year end.

Base salaries have typically made up 8% to 10% of total pay for S&P 500 CEOs over the past decade, the Journal analysis shows. Last year, half of S&P 500 CEOs received less than $1.2 million in salary. Most cash compensation comes from annual bonuses, and the majority of total compensation is received via equity awards whose valuations fluctuate with the market. In 2019, the median equity grant was valued at about $8.2 million, the Journal found.

Continued in article

Teaching Case From The Wall Street Journal Weekly Accounting Review on June 5, 2020 2020

Remote Working from a Different State? Beware of a Tax Surprise By Laura Saunders | May 29, 2020

Topics: State Income Tax , Individual Taxation , Coronavirus Summary: “If you’re doing your job in a state different from your usual one, beware: You may need to file returns and perhaps pay taxes there… Each state tax system is a unique mélange of rules that consider how long a worker is there, what income is earned, and where the worker’s true home, known as domicile, is. But nearly all states that have income taxes impose them on workers who are passing through. In two dozen states, that can be for just one day….[However,] So far, 13 states and the District of Columbia have agreed not to enforce their tax rules for remote workers who are present due to the coronavirus… but more than two dozen others—including New York and California…—are still set to levy taxes on these remote workers for 2020 [as of this writing].” Classroom Application: The article may be used in an individual income tax class to discuss state income tax levies. Questions: ·        Refer to the graphic entitled “Tax Toll on Remote Work.” Describe the range of states’ income tax treatment of remote workers located there due to the pandemic. ·        Does the Internal Revenue Service control the levies of these state income taxes on workers across the U.S.? Explain your answer. ·        Suppose you are a tax professional faced with a client frustrated that he or she may owe taxes in a second state after working from a residence there during the coronavirus pandemic. Since the state may never know whether the individual has worked from this remote location, could you sign the tax return as a paid preparer if the client insists on not filing an income tax return in that second state? Explain your answer and the factors you consider. It may help to listen to the related podcast from a preparer’s perspective, available at https://www.wsj.com/podcasts/relocated-out-of-state-during-the-pandemic-you-may-owe-state-tax/B12A95A2-843B-4FDD-ACB2-2A73B8105DA9.html ·        Explain the potential impact on income tax liability for 2020 on health care workers who went to New York to help cope with the pandemic outbreak there. What is your reaction to that potential impact?

Read the Article

Reviewed By: Judy Beckman, Ph.D., CPA, University Of Rhode Island (Uri)

 

"Remote Working from a Different State? Beware of a Tax Surprise," by Laura Saunders, The Wall Street Journal, May 29, 2020
https://www.wsj.com/articles/remote-working-from-a-different-state-beware-of-a-tax-surprise-11590744601

Many workers will face extra taxes by the states they have worked in during the coronavirus crisis

In March, millions of people had their workplaces scrambled by the coronavirus pandemic and hastily decamped to work remotely. Even with some offices reopening, many hope to prolong the arrangement now that summer is here.

But if you’re doing your job in a state different from your usual one, beware: You may need to file returns and perhaps pay taxes there. So check on your 2020 state taxes now to avoid a bad surprise next year.

Each state tax system is a unique mélange of rules that consider how long a worker is there, what income is earned, and where the worker’s true home, known as domicile, is. But nearly all states that have income taxes impose them on workers who are passing through. In two dozen states, that can be for just one day.

 

These rules are famous for taxing out-of-state entertainers and athletes like Michael Jordan and Alex Rodriguez. But this year they’ll complicate filings and payments for regular folks working remotely due to the pandemic, such as a tech worker based in Washington state who has temporarily moved back to his parents’ house in Oregon, or a New York banker who has set up a desk in a Florida beach home.

How will states know that someone has worked there? In various ways; employers will ask employees and tax preparers will ask clients about their work locations.

Employers and tax preparers may be able to treat a small amount of work in some states as de minimis. But that’s a judgment call, and signing a false return would put a preparer’s license at risk. DIY filers using commercial software should remember that tax returns are signed under penalty of perjury.

So far, 13 states and the District of Columbia have agreed not to enforce their tax rules for remote workers who are present due to the coronavirus, according to American Institute of CPAs spokeswoman Eileen Sherr, who tracks this evolving data. Some states don’t have an income tax, but more than two dozen others—including New York and California, which are famously aggressive—are still set to levy taxes on these remote workers for 2020.

Continued in article

Teaching Case From The Wall Street Journal Weekly Accounting Review on June 5, 2020

Macy’s Prices $1.3 Billion in Bonds at 8.375% By Nina Trentmann | May 27, 2020

Topics: Bond Valuation , Debt financing Summary: The opening statement of the article says that Macy’s “priced a total of $1.3 billion in five-year bonds…with [an] 8.375% interest rate” and follows by discussing other debt issuers’ recent interest rates. For the Macy’s issue, the article describes the real estate properties that will be used as collateral and also includes a description of Macy’s setting up a new wholly owned subsidiary to hold the collateral properties. The announcement of the offering is available at https://www.sec.gov/Archives/edgar/data/794367/000079436720000074/macys-2020securednotes.htm Classroom Application: The article may be used in financial reporting classes covering debt issuances. It also may be used in a class covering consolidations to discuss the legal reasons for setting up a wholly-owned subsidiary in this transaction and the expected accounting consolidation of the entity. Questions: ·        The opening statement says that Macy’s “price a total of $1.3 billion in five-year bonds…with [an] 8.375% interest rate.” What does it mean to say that the bond issue was “priced”? How does this influence the interest rate paid by Macy’s for the financing? ·        What range of interest rates on debt issuance is discussed in this article? Describe the range discussed in the article, state what issuers raised debt at these rates. ·        Why do you think that Macy’s incurred the interest rate described in the headline? ·        For what purpose has Macy’s raised this financing? ·        What is secured financing? What collateral will be used for this debt? ·        The article notes that Macy’s “will set up a new wholly owned subsidiary for the collateral….” Why do you think this structure of a separate company will be used? ·        How do you think the subsidiary, Macy’s Propco Holdings LLC, will be accounted for in the Macy’s consolidated financial statements? Explain your answer.

Read the Article

Reviewed By: Judy Beckman, Ph.D., CPA, University Of Rhode Island (Uri)

 

"Macy’s Prices $1.3 Billion in Bonds at 8.375%," by Nina Trentmann, The Wall Street Journal, May 27, 2020
https://www.wsj.com/articles/macys-prices-1-3-billion-in-bonds-at-8-375-11590615102

Retailer is said to have gotten $6 billion in orders

Macy’s Inc. priced a total of $1.3 billion in five-year bonds Wednesday, pulling in buyers with a 8.375% interest rate.

New York-based Macy’s announced the pricing just a day after launching an offering that had aimed to raise $1.1 billion to repay borrowings under a current credit facility. Macy’s got almost $6 billion in orders for the sale, pointing to strong investor demand for high-yielding bonds, according to a person familiar with the matter. Chief Financial Officer Paula Price, who is set to leave the company at the end of the month, declined to comment.

But the retailer also said the offering, expected to close on June 8, is subject to the closing of a new asset-based credit facility and certain other conditions. The company declined to comment on whether it has secured the facility yet.

Macy’s ability to raise funds under current market conditions was seen as a favorable development. “It should bridge them to when their sales improve,” said Chuck Grom, a senior analyst at Gordon Haskett Research Advisors LLC. “The market is looking at this as a positive, clearly.”

Macy’s stock price rose 19.6% to $7.38 a share Wednesday.

Credit Suisse Group AG , JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc. acted as book runners for the debt offering, according to the person familiar with the bond sale.

The fundraising round—which comes about a week after Macy’s said it expects a roughly $1 billion operating loss for the first quarter—is a vote of confidence that the company will surmount its past troubles as well as the coronavirus lockdowns of its business, said David Swartz, an equity analyst at investment research firm Morningstar Research Services LLC. But it is paying a high interest rate compared with other recent bond offerings, he added.

For example, in March, TJX Cos Inc. raised $4 billion in several tranches maturing between 2025 and 2050 at rates from 3.5% to 4.5%, according to S&P Global. Ross Stores Inc., a discount chain, locked in $2 billion in April in several tranches returning between 4.6% and 5.45%, S&P Global said.

Other competitors have had to pay more. Nordstrom Inc. and Kohl’s Corp. have also raised debt in recent weeks at slightly higher rates than Macy’s, according to S&P Global. Macy’s was likely able to offer a lower rate because of the value of the real estate it offered as collateral, Mr. Swartz said.

The senior secured notes, set to mature in 2025, will be backed by three properties in New York City, San Francisco and Chicago, 35 stores in select malls and 10 distribution centers, the retailer said at an investor presentation Tuesday. It also said it would set up a new wholly owned subsidiary for the collateral called Macy’s Propco Holdings LLC.

Continued in article

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Teaching Case From The Wall Street Journal Weekly Accounting Review on June 12, 2020

", The Wall Street Journal,
 

 

Continued in article

Humor for June 2020

Carol Burnett reveals the most 'devastating' sketch she filmed on her namesake TV show ---
https://www.foxnews.com/entertainment/carol-burnett-most-devastating-sketch-namesake-show

Forwarded by Tina

I’m on two diets. I wasn’t getting enough food on one.

a

 Apparently RSVP’ing to a wedding invitation “Maybe next time,” isn’t the correct response.

 Don’t irritate old people. The older we get the less “Life in prison” is a deterrent.

Have you ever listened to someone for a minute and thought “Their cornbread ain’t done in the middle.”

Aliens probably fly by earth and lock their doors.

“You will hit every cone on the highway before I let you merge in front of me because you saw that sign 2 miles ago like I did.

I really don’t mind getting older, but my body is taking it badly.

It turns out that being an adult is mostly just googling how to do stuff.

I miss the 90’s when bread was still good for you and no one knew what kale was.

Do you ever get up in the morning, look in the mirror and think “That can’t be accurate.”

I want to be 14 again and ruin my life differently. I have new ideas.

As I watch this generation try to rewrite our history, one thing I’m sure of....it will be misspelled and have no punctuation.

I thought getting old would take longer.

Confuse your doctor by putting on rubber gloves at the same time he does.

My wife asked me to take her to one of those restaurants where they make food right in front of you. I took her to Subway. That’s when the fight started.

Picked up a hitchhiker. He asked if I wasn’t afraid he might be a serial killer? I told him the odds of two serial killers being in the same car were extremely unlikely.

I went line dancing last night. OK, it was a roadside sobriety test... same.

Forwarded by Auntie Bev
What It's Like to Be Old

I really don't mind getting older, but my body is taking it badly.

You're still going to do dumb stuff, only much slower.

You define success differently. Now success is getting your leg through your underwear without tipping over.

The leading cause of injury is thinking you're still young.

Having benefits is knowing someone who can drive you at night.

It's hard to put an elbow on the bar when you reach from behind your walker.

That lifetime warranty on your old Kirby vacuum is worthless when it's just to heavy to push across the carpet.

The minister asks you to repeat your wedding vows, and you say A-E-I-O-U

Forwarded by Tina

Sign on a Pond:  Parking for Frogs Only;  All Others Will Be Toad

Growing Your Own Tomatoes is the Best Three Months You Can Spend Saving $2.17

Jellyfish Survived for 350 Million Years Without a Brain

Newborn's Confession:  "I just did nine months on the inside"

Me:  "Alexa, what's the weather this weekend?"
Alexa:  "Does it matter;  You ain't going anywhere."

Beware of that DUI checkpoint between the living room and the kitche

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