55.5 billion euro accounting error

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The discovery and deletion of a 55.5 billion euro ($A74 billion) accounting error at a troubled bank under government protection should ease Germany‘s debt levels, the Finance Ministry reports.

German media were agog at the discovery, caused by a double booking of debt held by FMS Wertmanagement, the so-called “bad bank” created from the insolvent parts of HRE bank, which was nationalised in 2009.

Freeing up the cash means that German debt, as a percentage of gross domestic product (GDP), should slide from 83.7 per cent to 81.1 per cent, said the ministry on Saturday.

The ministry said the problem was caused, essentially, when staff subtracted funds when they should have added them.

via 55.5 billion euro accounting error

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Netflix’s Accounting Rules Are Hidden Risk for Investors

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In late 2010, Tilson pointed out that Netflix‘s “acquisition of streaming content” on the cash flow statement wasn’t immediately being recognized under “acquisition of streaming content library” as an expense in the income statement.

For the third quarter of that year, Tilson noted that even though streaming-content costs were $115 million (up 74%), the associated amortization expenses increased only 17%. He noted in his presentation that from the first quarter of 2007 through the third quarter of 2009, acquisition costs were roughly equal to the amortization expense. Yet, starting in the fourth quarter of 2009 (when streaming-content costs started to accelerate), the two diverged.

via Netflix’s Accounting Rules Are Hidden Risk for Investors – TheStreet.

Accounting firms can help Singapore stay competitive

Teo Chee Hean

Accounting firms can play an important role in helping Singapore stay competitive in the financial services industry while also devising innovative business models, said Deputy Prime Minister Teo Chee Hean on Monday.

Mr Teo pointed out that the accountancy sector, with its adherence to international standards and regulation, will play a crucial role in helping other businesses grow while also thriving as an industry in its own right.

‘We want Singapore to be a global accountancy hub that offers high-value-added professional accountancy services, that is a home for global accountancy organisations and serves as a thought and practice leader in the design and implementation of global accounting practices and standards,’ he said.

Singapore aims to raise the accounting sector’s contribution to the economy from 0.4 per cent now, to 1 per cent over the next 10 years.

via Accounting firms can help S’pore stay competitive: DPM Teo.

USA and Hong Kong Sign Mutual Recognition Agreement for Accounting

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NEW YORK and NASHVILLE, Oct. 24, 2011 /PRNewswire-USNewswire/ — The U.S. International Qualifications Appraisal Board (U.S. IQAB) and the Hong Kong Institute of Certified Public Accountants have entered into a five-year Mutual Recognition Agreement that establishes the basis for reciprocity between the U.S. and Hong Kong accounting professions.

“The agreement we’ve signed today with the Hong Kong Institute of Certified Public Accountants will make great strides in advancing the reciprocity of CPAs in the U.S. and in Hong Kong,” said William Treacy, chair of the U.S. IQAB.  “IQAB has thoroughly evaluated the educational, examination and experience requirements of CPAs in Hong Kong and is confident they are substantially equivalent to those of the U.S. CPA.”

The agreement was signed at NASBA’s 104th Annual Meeting in Nashville.

“Our agreement with the Hong Kong Institute validates our purposeful and determined quest to be truly global in mutual recognition of high quality accounting credentials.  We look forward to our association with the Hong Kong Institute and to more effectively facilitating the professional practice of accountancy on behalf of the public interest of both the United States and Hong Kong,” said David Costello, NASBA President & CEO.

The U.S. IQAB is a joint body of the American Institute of CPAs and the National Association of State Boards of Accountancy.

“This new agreement will allow qualified accountants in the U.S. and Hong Kong to work across borders,” said Barry Melancon, AICPA president and CEO.  “Globalization is rapidly changing the way business is done across the globe and CPAs will continue to play a vital role in the financial systems in the U.S. and abroad.”

via U.S. and Hong Kong Sign Mutual Recognition Agreement for Accounting

China’s accounting problem

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The Big Four — PwC, Deloitte & Touche, KPMG and Ernst & Youngaudit the books of most of the world’s largest corporations through networks of legally separate audit firms. Their Chinese arms, which also audit Chinese operations of large multinational companies, have also been beyond the reach of PCAOB inspections.

via Analysis: Painful choices loom on China’s accounting problem

Business welcomes audit exemption plan

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Ministers will on Thursday unveil plans to save more than 100,000 businesses at least £600m a year in accountancy and administration costs by relaxing the requirement to conduct a financial audit.

The Department for Business, Innovation and Skills will launch a consultation on proposals to allow more small companies and subsidiaries to decide for themselves whether or not to have an audit.

Business groups welcomed the move, but warned ministers needed to deliver such steps regularly for companies to gain confidence in the government’s deregulation drive.

At present, European Union rules mean that to classify as “small” for accounting purposes, a company must comply with two out of three criteria: having no more than 50 employees, a balance sheet of no more than £3.26m and turnover of no more than £6.5m.

However, to obtain an audit exemption in the UK, small companies must fulfil both the balance sheet and turnover criteria. Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria, saving an estimated £206m a year. An average audit for a small company costs £9,500.

via Business welcomes audit exemption plan

US to adopt international accounting rules

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Oct 5 (Reuters) – The United States would still play a pivotal role in shaping global accounting rules if it switches to standards set by the international accounting body based in London, a top rule-maker said on Wednesday.

Hans Hoogervorst, chairman of the International Accounting Standards Board (IASB), sought in his first U.S. speech to reassure America that giving up sovereignty in accounting rulemaking would not mean a loss of influence for the world’s biggest capital market.

The U.S. Securities and Exchange Commission (SEC) is due to announce by year end whether it will make the switch.

World leaders including President Barack Obama have committed themselves to a single set of global accounting rules to improve corporate reporting transparency.

But some in Congress and smaller American firms are leery about a loss of independence in standard setting and the extra costs of switching to global rules.

Hoogervorst said U.S. sovereignty would be protected by the SEC having a final say before any IASB rule is introduced.

“Such endorsement mechanisms provide an important ‘circuit breaker’ if the IASB produced a standard with fundamental problems for the United States,” Hoogervorst told an accounting conference.

The SEC would remain in full control of enforcement.

“So there is absolutely no danger of importing different enforcement standards from abroad into the United States,” the former Dutch finance minister added.

Big companies such as Archer-Daniel-Midland Co , Bank of New York Mellon Corp , Kellogg Co , Chrysler, United Continental Holdings Inc and Ford Motor Co have called for U.S. adoption of IASB rules, he added.

Hoogervorst said it would be reasonable that a relatively long transition to full adoption is provided, along with an option of early adoption for companies that want to. (Writing by Huw Jones; Editing by David Holmes)

via Global accounting rule setter courts U.S. support | Reuters.