Professor Elam

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  • Professor Elam

    Apache Converts to Successful Efforts

    Weekend Sept  17 2016

    Apache has converted from full cost method to the successful efforts method for accounting for dry holes.

    The difference between the two methods is explained at the end of Chapter Ten in your Spiceland Intermediate text. No, I am not going to explain it here, look it up!

    The CEO of Apache notes that most of its peer group uses success efforts. So switching increases comparability of reporting and comparison of the statements between the firms.

    Comparability is explained in Chapter One. It is one of the Fundamental Qualitative Characteristics which consist of Primary and Enhancing. It is listed as the first enhancing characteristic including consistency ion the Conceptual Framework.

  • Professor Elam

    What no Write Downs at Exxon?

    Weekend Sept 17 2016

    Click the link at the bottom of this article to read the entier WSJ story.

    Oil and gas firms have taken $163 Billion in write downs in 2015, but not Exxon Mobil XOM. The NY Attorney General, unable to pin a ignoring climate change on XOM, is not investigating the lack of write downs. Here is a must read article for Texas accounting students.

    A write down or impairment charge is a result of comparing an undiscounted cash flow from a project with its carrying cost. If the cash flow number is less than book value, the item is reduced by the difference between book value and fair value. This is different from the original booking of the reserve value for the oil or gas, got it?

    CEO REx Tillerson states that XOM does not bail out managers by writing down reserves. He claims XOM is very conservative in its initial valuations, ignoring short term changes in price in the future.

    And what does external auditor PwC have to say-nothing which is to be expected.

    Once again, accounting students need to read for context.

  • Professor Elam

    Stumpf to Testify

    Weekend Sept 17, 2016

    Congress turns up th eheat on WFC, suggesting incentive pay be disgorged.

    We have been following this story and it is certainly not getting any better for WFC.

    A letter write to the WSJ suggests that managers who urged bad practices cost the WFC shareholders money, to be sure.

    But as I say this all follows a sad pattern of failure of the Tone at the Top, which another letter writer notes seems to be lacking at WFC.

    No doubt there will be lively comments when the CEO appears before Elizabeth Warren this Tuesda.

  • Professor Elam

    Prosecutors Take up Wells Fargo

    Thursday Sept 15, 2016

    In the wake of the $185 M find, the US Attorney's office 

    are deciding whether to pursue civil or criminal lines against the bank. Subpoenas have been issued. A criminal investigation would raise the stakes for WFC well above a civil trial. Now we learn that WFC has fired some 5,300 employees for such practices over the last five years. Sumpf faces the Senate Banking Committee Tuesday where Elizabeth Warren lies in wait to pounce on the very kind of practice she abhors among banks.

    Stay tuned….

  • Professor Elam

    Is the Bond Bubble Bursting?

    Thursday Sept 15 2016

    We are studying bonds in ACCT 3304. I have advised all classes that much can be learned in context by reading the WSJ.  Today's issue has several articles on bonds.

    Long Bonds Waiver in Volatile Trading

    The Streetwise column warns of further possible bond price declines after decades of advance.

    Heard on th Street declares the Good Times are Over for Global Bonds

    Click the links to learn how, after offering negative yields, buyers get back less money than they paid for the bond, bond prices are now falling and yields are rising.

    There is unlimited risk of buying a bond with a negative yield. As rates rise it is hard for me to imagine that anyone would bid on such a bond, why, there is no interest income.

     

  • Professor Elam

    WFC in Charge of Unit Received $95 M in Stock Options, 3,500 Employees Fired

    Thursday Sept 15, 2016

    We have been following the Well Fargo Scandal.  CEO John Stumpf is on record saying he wanted as many customers as possible to have a WFC credit card which of course earns interest and fees for the Bank. Carrie Tolstedt was in charge of the unit where employees allegedly opened unauthorized accounts. The Consumer Financial Protection Bureau fined the bank $185 M for these actions. Now the result.

    Carrie Tolstedt was in charge of the unit. Her retirement was announced in July effective the end of this year. She walks out with $95 Million in stock options. Meanwhile the poor blighters who did what they were told, all 3,500 of them were fired. Claiming his compensation was not tied to 'oroduct sales goals' (gee how is that for a CEO turn of the phrase spin!), Stumpf of course gets to keep his job. He says he is responsible and accountable.

    Gee lots of ethical questions here. If he is accountable why is there no loss of any kind for Stumpf? Stumpf insisted the employees push product to customers. Here they did so without informing clients they had created accounts. If the employees had refused, what do you think would have happend to the. If not fired no doubt criticized and no bonus.

    Asked about claw back provisions for Tolstedt's options, well he replied that is a Board matter. Does anyone think the Board will discipline her while letting him continue as CEO And recall of course that he picks the Board Members.

    What about the fired employees?

    Regarding the abusive Catholic priests comedienne Wanda Sykes remarked, what does it take to get kicked out of this club? 

    Okay so WFC paid a fine, but as in so many instanced the Too Big To Fail organizations like this simply consider fines a cost of doing business.

    What do you think would be appropriate?

    This falls under issues of the Tone at the Top, and Corporate Governance.

  • Professor Elam

    SA CPA Accounting Careers Workshop

    Wed Sept 14, 2016

    Welcome to the Big Leagues!

    SACPAS 2016 Fall Accounting Careers Workshop

    What?
    The San Antonio CPA Society invites you and your accounting majors to the 2016 Fall Accounting Careers Workshop.

    A new format featuring table topics will allow students to learn about a variety of careers available to accounting professionals from CPAs in
    tax
    audit
    IT
    business & industry
    nonprofit/government, and
    general topics for new accounting majors

    Where?
    Norris Conference Center
    NW Lp 410 between San Pedro & Blanco
    (near Alamo Drafthouse Cinema)
    Link to map/directions
    Free surface & sublevel parking
    When?
    Friday, September 30, 2016
    5:30 – 9 pm
    Registration & Meet the Firms – 5:30 – 6:30 pm
    Welcome/Introductions/Table Topics – 6:30 – 8 pm
    Meet the Firms – 8 – 9 pm

    Confirm your attendance
    To help us plan for adequate seating and food/drinks, please collect the names of students who will be attending and forward a list to Amanda Talaat at amanda@sacpasociety.com by 9/27/16.
    RSVP
    Firms & Sponsors
    Students will have time before and after the program to
    meet recruiters and representatives from the following:
    ATKG LLP
    BDO USA LLP
    BKD LLP
    Cohen Berg & Co
    Sol Schwartz & Associates PC

    CPA Exam Providers:
    Becker Professional Education
    Wiley

    Thanks to these supporters:
    Maria Martinez, CPA

    Learn More

    San Antonio CPA Society | 210-828-2722 | info@sacpasociety.com | sacpasociety.com

  • Professor Elam

    Wells Fargo Fined $185 Million for Creating False Accounts

    Friday Sept 9, 2016

    Wells Fargo was fined $185 M by various agencies. for creating unrequested bank accounts and collecting fees on them.

    Rumblings of account impropriety have been in the open since 2013, when an LA Times investigation first revealed that sales pressures led Wells employees to cut legal and ethical corners. “Wells Fargo is the nation’s leader in selling add-on services to its customers,” the paper wrote at the time, in an article that would go on to get the attention of the Los Angeles city attorney and lead to the city’s 2015 suit against the bank. ”I’m not aware of any overbearing sales culture,” then-CFO (and current COO) Timothy Sloan told the Times. 

    All the while, Wells CEO John Stumpf has been frank about his desire to get Wells credit cards in the hands of his customers. “I am not going to be satisfied until every creditworthy customer who calls us their bank carries our credit card,” he said in 2014.

    In ACCT 5308 we study ethical behavior and corporate governance. And we learn that proper ethical behavior is a result of the 'tone at the top.'  What is implied in the tone of the remarks above by the CFO and current CEO?

    Worse, half of all the bank accounts in the USA are now in the custody of four or five large banks, WFC is one of them. It is unusual that finally a company actually admitted complicity in such an act.

    “Our entire culture is centered on doing what is right for our customers,” Stumpf said in a company-wide memo Thursday. “However, at Wells Fargo, when we make mistakes, we are open about it, we take responsibility, and we take action. Today’s agreements are consistent with these beliefs.”

    This news came out Sept 9, 2016. As I write the Dow is down 269 points, WFC dropped 70 cents along with the overall market.

    This is just another example of Too Big To Fail. The government pockets a hefty fee, the guys at the top keep their jobs and bonuses, and 3,500 employees get pink slips for doing what the guys at the top wanted.

  • Professor Elam

    Looking for a Career in Forensic Accounting?

    Sept 7. 2016

    I can't think of a better place to start than learning all about health care, Medicare, Medicaid.

    Arecent GAO audit found 50 dead people who recovered $9.8 M after they died.

    Large programs like this are a treasure trove for fraudsters. The programs are so large that the fraudster knows there is little likelihood of being caught.

    And with an aging population expect attempted frauds to grow. Health and Human Services registers an 11..5% fail rate. School lunches have a 15.7% fail and Earned Income Tax Credit EIC a shopping 23.8%.

    As I say in class there are lots of opportunities for Internal Auditors.

  • Professor Elam

    Eye in the Sky Combats Crime

    Thursday Sept 8, 2016

    Ross McNutt is working his latest project in Baltimore, Maryland. His company, Persistent Surveillance Systems, has been photographing a 30 square mile radius continuously since January using a special Cessna fitted with a 192-million-megapixel camera setup. That’s the equivalent of 800 video cameras live streaming to his downtown office, where the heavy lifting occurs.

    A team of analysts using the video data and police scanners follow crimes in real time. They watch activity, follow assailants and vehicles as they leave the scene. McNutt jokes the software is like “Google Earth Live with Tivo” because his team can determine both where the bad guys go, and where they came from. The only thing left to do is a detailed report delivered to the police.

    This is not a new idea. McNutt, an MIT trained physicist and aeronautical engineer designed the program for the Pentagon to watch the dangerous streets of Iraq. Later, Persistent Surveillance would have limited stints in Philadelphia, Baltimore, Indianapolis, Compton, Charlotte, Nogales and Torreon, Mexico. The latest Baltimore project is special because it’s a return engagement.

    That’s the key. Increasingly, elected officials are turning toward more surveillance as the solution to crime and terror threats despite obvious objection from civil libertarian groups like the ACLU. Manhattan now has more than 4,000 closed circuit television cameras. The New York Police Department generates one million hours of video footage just from police body cameras. And advances in video analytics due to machine learning is making all of that data actionable.