Professor Elam

Accounting & Investing Info for San Antonio A & M

recent posts

about

  • Professor Elam

    How the US Won WWW II – Supply Chain Management, Managerial Accounting

    Tuesday July 30, 2013

    Here is a great You Tube video on the B 24 bomber plant. Henry Ford decided he could build a B 24 bomber every hour. This required construction of the largest single bulding for manufacturing he had ever
    Screen Shot 2013-07-30 at 8.58.04 AM constructed. But this is how the US won the war. Auto makers shifted to war production of planes, jeeps, and trucks. As the video announcer says, Hitler could never have imagined this was possible. The plane had four 1200 horsepower engines and could fly 3,000 miles without re fueling. 

    We learn the costs of quality in managerial accounting.

    Design

    Internal Testing

    Internal Failure

    External Failure

    The idea is to design the construction process to eliminate mistakes from happening. An internal testing program will weed out the problems. These two steps hopefully reduce internal and external failures. Clearly one does not want an external failure on a bombing mission. Notice in the video that each plane was flown and tested before being shipped out. The crew even stopped engines in flight and re started them and dropped dummy bombs to ensure the bomb function worked properly. 

    Ford produced half of the 18.000+ B 24s, it was the most produced plane of the war. 8600 planes with one produced every hour in 12 hour shifts would require 716 days, with 8 hour shifts, 1075 days or three years working every day of the year. 

    Imagine the supply chain necessary to support an assembly line such as this. The requirement of aluminum alone for the body would be staggering not to mention the gauges, guns, and landing gear required. If the supply chain stopped at any point, production would be halted. America emerged from WW II as the premier manufacturer in the world. But by 1970 this lead had been lost to Japan in areas such as cameras, stereo, and motorcycles. It was the design of multiple cylinder dual overhead camshaft engines for motorcycles that gave Japan the lead in small car design. 

    Learn more about the Willow Run Plant here.

    Goldie Hawn made a movie on the subject of women working in WW II plants,
    Screen Shot 2013-08-01 at 11.58.42 AM

    Swing Shift.

     

  • Professor Elam

    Certifications You May Not Know..

    Monday July 29, 2013

    As my students are aware, I am an advocate of attaining an accounting certification. Attending my classes and reading this blog will make one more aware that the CPAs no longer have the field to themselves. 

    You can therefore, just imagine my excitement on making a recent discovery. Yes friends I have just returned  from the foreign land of Texas, the area that still gives hope and sustenance to those aherents to the Flat Earth Society (drive past San Angelo and you will fall off the edge of Texas), otherwise known as the Permian Basin. 

    in Men in Black Tommy Lee Jones depends on tabloids for news of aliens. I learned to depend on the paper real folks read in West Texas, yep The Thrifty Nickel Want Ads. Alert forensic that I am, my attention was drawn to page 19 where one Christine McLendon touts herself as a 

    Certified Clairvoyant Psychic

    Certified Psychic Medium

    Certified Pet Psychic

    Certified Medical Intuitive

    among other life accomplishments, well I mean, who knew there were such certificaitions?  Now don't be poking fun, even as I write Merrill Lynch claims to be in the wealth management business, five years ago it was on the ropes and for sale to Bank of America. An how much difference can there be, the Merrill Lynch websites promises, really it does

    An Advisor who has Answers to your questions, even those you didn't thnk to ask.

    So, after all, does Christine really say anything different than Merrill-go ahead and compare!

    It took a bit of doing but I discovered that apparently one Anna Sayce provides the programs leading to this or these designations. Interestingly her site goes by the name of psychic but sane. Anna is now based in New Zealand, if this will get me a livelihood in New Zealand, well there must be something to it. 

    At any rate, is there that much difference between claiming to know which stock will rise and being a psychic, is not the former claiming to be an investment psychic?

    So here is another career path. One fellow dreamed up Certified Fraud Examiner CFE and now dispenses programs from Austin, Tx. Another chap realized that if folks will pay $3 for a cup of coffee (Starbucks) surely they will line up to pay $50 for a yoga tank top, Lululemon LULU. So use your imagination….

     

  • Professor Elam

    Toastmasters Workshop Saturday July 27

    Monday July 22, 2013

    David Henderson, winner of the Toastmaster  World Champion Speaking Contest will conduct workshops here Saturday July 27, 2013. Notice  that we have added  category for TAMUSA Toastmasters so you can
    Screen Shot 2013-07-22 at 12.10.32 PM access all things about our new club. The cost is near zip to attend and this looks to be a valuable resource. Click the link to obtain all the details.

  • Professor Elam

    The Lack of Internal Control

    Monday July 22, 2013

    The State Auditor's Office raised concerns  about internal control procedures at Texas State University. No money was missing but apparently various compliance working papers were not as they should be. This is surprising given that the staff at Texas State  no doubt regularly attends such meetings on such matters. But it just goes to show that an itnernal audit funciton is important to provide assurance that external auditros will be happy. 

    On a far more serious note, U S Marshals have lost some 2,000 encrypted radios.  The Marshal service blamed it on poor record keeping. Besides the millions of dollars of lost equipment, this raises the question, who has the radios now?  Clearly this is a problem if the radios are in the hands of terrorists or other criminals. But who knows, maybe all the rados are gone in which case none of the marshals are talking on them anyway!

    The old saying holds sway, when it is everyone's property, it is no one's property. When I was an internal auditor for the City of Austin in the 1970s, it was determined that 160 lawn mowers were missing. Apparently employees simply walked off with them. 

    We study internal control in accounting. There ineeds to be an identification system for such equipment. A group independent of the users, such as internal auditors, needs to conduct surprise audits to verify the existence of the assets. When users know they are subject to such scrutiny, they act in a more responsible manner. 

  • Professor Elam

    On Being a Native Texan

    Friday July 19 2013

    Regarding our post earlier today on New York's attitude towards Texas, one student admits to being from New York but never really thought about allegiance to one state or the other. Clearly she is not ready for the realization that nirvana has indeed arrived for her.  She has fled the land of brownouts, blackouts, snowstorms, garbage strikes, and the poster city of the Northeast, Hoboken, New Jersey. A recent mass arrest in Hoboken of 42 criminal suspects included two rabbis no less.  We all know that Dr. Zhivago was filmed at Chicago's O Hare airport, and in April no less, and that Detroit, MI just went bankrupt. 

    For those experiencing the relief and enlightenment that comes from their first encounter with chili, tex-mex fajitas, green polo enchiladas,  Pace Picante Sauce, chicken fried steak, catfish in all forms, blackened or fried, gumbo, black-eyed peas on new years, Texas Gulf Red Snapper, Shrimp and blue crab, a well done Santa Gertrudis steak off the grill (Santa Gertrudis was developed at the King Ranch by the way) not to mention the life  long look of escape and enrapture on refugees from Michigan and other foreign countries, for those we usually say

    Well you weren't from here but showed good sense by gettin' here as fast as you could.

    Texas is a blue bonnet carpeted experience that includes hundreds of miles of coastline, Lake Amistad, the Chisos Mountain Basin in  Big Bend to the Palo Duro Canyon in the Panhandle. Texas also boasts  perhaps the best law enforcement agency in the world, The Texas Rangers. 

    Texas is the only state that joined the USA as a nation, a mistake we will surely not make given  a second chance. 

    Of Texas were indeed still an independent naion it would rank 12th in the world with a larger economy than Russia. 

    Bum Phillips explains the concept of what it means to be Texan. Here is a sample 

    Anyone who ever hung a map of Texas on their wall or flew a Lone Star flag on their porch
    knows what I mean. My Dad's buddy Bill has an old saying. He says that some people were
    forged of a hotter fire. Well, that's what it is to be Texan. To be forged of a hotter
    fire. To know that part of Colorado was Texas. That part of New Mexico was Texas. That
    part of Oklahoma was Texas.

    Texan Gary P. Nunn wrote What I Like about Texas

    Get in the spirit of things along with the other 928,723 who have listened to Gary sing about it on 

    You Tube, great photos as well!

    yrics to What I Like About Texas :

    You ask me what I like about Texas
    I tell you it's the wide open spaces!
    It's everything between the Sabine and the Rio Grande.
    It's the Llano Estacado,
    It's the Brazos and the Colorado;
    Spirit of the people down here who share this land!
    It's another burrito, it's a cold Lone Star in my hand
    It's a quarter for the jukebox, boys,
    Play the sons of the mothers of the bunkhouse band!

    You ask me what I like about Texas
    It's the big timber round Nacadoches
    It's driving El Camino Real into San Antone
    It's the Riverwalk and Mi Tierra
    Jamm'n out with bongo Joe
    It's stories of the Menger Hotel and the Alamo!
    (You remember the Alamo!)

    It's another burrito, it's a cold Lone Star in my hand!
    It's a quarter for the jukebox, boys,
    Play the sons of the mother love'n bunkhouse band!

    It's another burrito, it's a cold Lone Star in my hand!
    It's a quarter for the jukebox, boys,
    Play the sons of the mother love'n bunkhouse band!

    Well, you ask me what I like about Texas
    It's Blue Bonnet and Indian paint brushes
    Swimming in the sacred waters of Barton Springs
    It's body surfing at Freo
    It's Saturday night in Del Rio!
    It's crossing over the border for some cultural exchange!

    It's another burrito, it's a cold Lone Star in my hand!
    It's a quarter for the jukebox, boys,
    Play the sons of the mother love'n bunkhouse band!

    Well, you ask me what I like about Texas
    Well, I could tell you, but we'd be here all night long

    _____________
    And quite frankly, that's how I feel about itl. 

  • Professor Elam

    The New Civil War Comes to San Antonio

    Friday July 19 2013

    Roy Bragg  responds to NYmiddlefingerTX.com, which as he says really is the web address

    http://www.nymiddlefingertx.com

    which of course has negative things to say about Texas. Welcom to the New Civil War, now on the net.

  • Professor Elam

    Detroit Takes Chapter 9

    Friday July 19 2013

    TAMUSA accounting student Joe Dupuy requests a comment on the Detroit bankruptcy. He noted I have mentioned this in class. 

    Here is a  good WSJ explanation of what is going on.

    Detroit joins Jefferson County AL, Stockton, CA, and San Beniamino, CA in BK court. Chapter nine was created for cities after the New York City debacle of 1976. President Gerald Ford never actually told NYC to drop dead. But as this article illustrates, a dose of reality may be coming for similar cities. 

    Here is what is really happening. 

    ON my investing blog I have termed this The New Civil War. The maps of the North South conflict, the Red versus Blue states for Republican and Democrat, and the Right to Work Map, are all the same. Union contracts have broken cities and states now just as they broke New York in 1976. Amazingly Michigan has now passed a ;right to work law. A right to work law was allowed by the Taft Hartley Act of the late 1940s. All the southern states have one, a worker does not have to join a union to obtain employment. For years Detroit politicians simply re cycled union paychecks into compulsory union dues which were funneled to Democrat politicians. Today that former 1950s city of 1.5 million has about 650,000 residents. 

    Other large US Cities face similar fates, Los Angeles, Chicago, and even Houston have huge unfunded liabilities. The state ofIllinois another basket case, handing out tax favors to keep companies from leaving the state. Now that Detroit has legitimized Chapter Nine, oh and don't forget the capital of Pennsylvania, Harrisburg, more cities will be following this route. Today Chicago Public Schools lay off 2,110 teachers and staff.

    In bankruptcy all agreements can be re negotiated, including union agreements. Who will win, the creditors, the employees and retirees, or the citizens, or will all lose something? 

    I have maintained that Meredith Whitney needed to broaden her definition of default.  I suspect that everyone involved with share in the default, not just the bond holders. 

    I have also maintained that the US is playing out 1973-74 alll over again. In the 1970s it was New York City in trouble, now we have multiple cities and entire states in trouble. 

  • Professor Elam

    Dell Still on the Ropes

    Friday July 19 2013

    And meanwhile, as alert Cary Kingsley, TAMUSA accounting student noted, one would think Mike Dell, former boy wonder, would have counted the votes before trying to take the company private. 

    Now it is increasingly problematic that Mike Dell will remain CEO. If the vote to take it private fails, you can bet the victors will sack Dell for failing to turn the company around and then for presumably rewarding that failure with a private take over for he and his friends. 

    Talk about unintended consequences….

  • Professor Elam

    MSFT Takes $900 M Charge

    Friday July 19 2013

    The announcement by MSFT of earnings and a write off on its 'high profile Surface RT Tablet' (the WSJ description not mine) offers a good deal of insight on why we study accounting. 

    E/S  Expectations were for 75 cents, actual versus  66 cents

    I assume the R & d expenditures were capitalized once the Tablet came on the market. but MSFT hd to admit there is nothing there and so the impaired asset was written off.

    Here is the CFO's comment. 

    “We reduced the price of the Surface RT by $150 to $349 per device,” she explained. “As a result of this price change, as well as the inventory adjustments for related parts and accessories, we recorded a $900 million charge to our income statement.

    Read more: http://www.itpro.co.uk/tablets/20229/surface-rt-900m-write-down-hits-microsofts-q4-hard#ixzz2ZUm2bEEL

    And so the stock price dropped 6.3% in after hours trading. You see, the failure to hit an earnings estimate impacts the stock price. Frankly I was mystified as to why MSFT stock had risen to over $30, does anyone reading this blog own a Surface RT Tablet, better yet, has anybody even seen one in use, i have not. 

    Or as Amy Hood CFO put it

    'I want to be very clear. We know we have to do better particularly on mobile devices.

    Yeah but when will that happen? MSFT dropped the price on the table by $150, from %500 to $350, a 30% price cut. Do you suppose there is any gross margin in that for MSFT?

     

  • Professor Elam

    Links to Becker CPA Material

    Friday July 19 2013

    Becker CPA has posted some You Tube Videos on the CPA Exam. Becker has been in the CPA Review business for decades. You will no doubt learn more about the exam process by viewing this on line.