Kudos to Russia

1
Kudos to Russia
(In retrospect, a Tuesday due date would have
been better.)
2
A Game try to make it real.

• Imagine you are the sole income earner supporting
  a spouse and three young children. Youve
  cleared the six-figure salary mark, but realize
  that enhanced income opportunities are needed to
  support your lifestyle and the inevitable braces
  college dynamic due.

3
A Game try to make it real.

• A few years ago, you started an on the side
  business venture involving construction
  contractsits pulling in an extra 20k per year,
  and you consider the cost (your time) / benefit
  tradeoff worthwhile.
• You are confident that expansion could be
  profitablespecifically

4
A Game try to make it real.

• If you take out a loan for 200,000, there is a
  60 chance you will win a contract worth 400,000
  (enough to pay back the loan and have 200,000
  left for the braces / college fund).
• Unfortunately, if you dont win the contract, you
  will get nothingbut you will still owe the bank
  200,000 (which is consumed forming plans for
  your bid).
• What will you do???
• Take the loan / Dont take the loan???

5
A Game try to make it real.

• What if you could take a 1/10th ownership
  interest?
• (In other words, now the choice involves putting
  up 20,000you have a 60 chance of turning it
  into 40,000 and a 40 chance of losing your
  investment.)
• What if you could take a 1/100th ownership
  interest?
• Did anyone change their tune? If so, why?

6
A Question from North Korea

• Why do life reinsurance companies exist in our
  business society? Do cendant companies actually
  benefit from full life reinsurance policies?
• (NKs direction-following discussion omitted)

7
Are Professors Contestable or Negotiated Jobs?
Leamer files, Part 1

• Are we talking
• pre- or post-tenure?

8
Oh ye of tenured status

• At this point in your career, are you better off
  critical or uncritical feedback?
• Why?

9
To the extent possible

• I will do what I think is in your (collectively
  speaking) best interest.
• You might disagree with my views and opinions,
  but in this class my views and opinions count
  a whole bunchfor example

10
Month 1 of this course

• In my opinion, a success.
• Two (or three) recurring economic concepts were
  exploredI thought that was goodhopefully, you
  thought it was educational (if you disagree, keep
  in mind my opinion counts a whole bunch).

11
A Tangent on Grading

• The feedback loop is relatively long.
• In my opinion, developing your writing skill is a
  crucial part of being a successful auditor.
• All non-rejected Leamer questions were forwarded
  to our technical writing assistant this
  afternoonyou should received these (along with
  my feedback) next week.
• All rejected Leamer questions must be redone
  (remember free second chances occur in this
  classmore on this later).

12
A Tangent on Leamer

• Hes pretty glib, pompous, etchuh?
• A difficult read?
• Needlessly long?
• Similarities to accounting standards?

13
Notes for the Future

• Dont hand in a weekly assignment saying, I just
  didnt understand what was going on (note the
  ending preposition).
• Thats unacceptable in Public Accounting and in
  this class.
• If you have put forth effort and dont
  understand, what should you do?

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End of the Tangent(s).
15
The Political Economy

• Insiders know the politics
• The KPMG take on the unexpectedly fast
  rules-to-principles path
• The SEC is very likely to begin accepting IAS
  instead of US GAAP - reconciles financials for
  foreign listingsits moving much quicker than
  anyone expected
• What will happen next????

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(No Transcript)
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A VERY NOTABLE Hierarchical DIFFERENCE
IAS GAAP IAS Pronouncements Stuff similar to
EITF stuff Textbooks and stuff like that
US GAAP FASB Pronouncements EITF
Stuff Textbooks and stuff like that
18
IN CLASS QUIZ

• Be yourself, not your country.
• Would this hierarchical change have affected
  Arthur Andersons relationship with Enron? If
  so, how?

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General Questions

• How would Principles-based accounting standards
  affect SOX?
• How would Principles-based standards affect
  client / auditor relationships (see Canada)?
• How would P-b standards affect legal proceeding
  against auditors?

20
A Tangent on Grading

• If I put RET 1 on your first business
  questionit was for not following directions. In
  retrospect, this was petty on my partbut on the
  first three of four RET 1s, I couldnt tell why
  you were interested in the questionand later, I
  tried to stay consistent (although, again, this
  is a bit petty).if you have a RET1 and would
  like to change your question, feel free.
• Please put your countrys revised Business Q 1
  in my mailbox by next Wednesday.

21
RET 1s
No need to pick these upbut I have them if you
didnt save your question. Again, redo by
following the directions (which typically means,
explain why you find your question so
interesting). Also, feel free to change your
question if, in retrospect, you dont find it
interesting.
22
A Question from South Korea and Spain

• Will regulations by SOX ever be relaxed and, if
  so, would that reduce the demand for accountants
  causing newly hired Big 4 auditors to lose their
  jobs?Verbal reading of SK/S comments

23
Is that a Business and Economics related question?

• (Im not surebut two countries had this
  question)

24
Refining Three Questions(refer back to the
syllabus)

• Start reading the WSJ regularly.
• Business Questions 2 must come from a specific
  WSJ article.
• No current due datebut find something
  interesting or something you dont understand
  very well.

25
More Grading

• If I put RET 2 on your first business question
  I genuinely appreciate the sincerity of your
  question however, RET2s are either self
  answerable (in my opinion) or maybe interesting
  but un-aswerable instructions for how to
  proceed have been individually marked on your
  countrys paper.
• Please put your countrys response in my mailbox
  by next Wednesday.

26
RET 2s
You need to pick these upafter I leave
class. Again, follow the individual instructions
on your sheet.
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Next Weeks Assignments

• Address Irans question (part of it).
• Put your countrys response in my mailbox by next
  Tuesday at noon.
• Q Will America be able to find a reasonable
  solution to the social security funding issue?

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Assignment

• List available data sources you would use to
  address the question and outline the analysis you
  would perform (in less than two pages).
• Dont actually perform the analysisjust outline
  relevant factors (that have available
  information).

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Leamer files, Part 2 Weekly Assignment 1
Although a spectrum of quality exists, my quality
assurance responsibility is to decide when the
glass is more empty than full.
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RET 2 Classification
Leamer files, Part 2 Weekly Assignment 1

• Nigeria re-write and return your assignment to
  my mailbox by next Monday at noonIm not giving
  this assignment to the technical writing grader.

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RET 1 Classification
Leamer files, Part 2 Weekly Assignment 1

• The general do over classification.
• Think more critically about your assignment.

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RET 1 Classification
Leamer files, Part 2 Weekly Assignment 1

• Things to think about
• Are you answering the question that was asked?
• Are you misrepresenting Leamers views?
• Do your arguments contain real content, or are
  you writing a bunch of words with little meaning?

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RET 1 Classification
Leamer files, Part 2 Weekly Assignment 1
Trying to put myself in your shoes, there is a
legitimate claim that Im not telling you how to
improve.
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RET 1 Classification
Leamer files, Part 2 Weekly Assignment 1
Be more self-critical on the important second
attempt. Feel free to clarify /or change your
responses. At least two responses need more
thought.