Accounting education

Morningstar has issued a statement that it is considering establishing its own credit-ratings systems in competition with rating agencies such as Moody’s and Fitch, although it has no plans in place.

Securities and Exchange Commission Chairman Mary Schapiro announced plans to make it easier for SEC staff to bring enforcement actions and indicated that the Financial Accounting Standards Board would further modify fair value accounting standards.

Clients are coming to their CPAs with concerns about their shrinking retirement savings as the recession deepens.

Manny Weintraub is the founder, principal, and portfolio manager of Integre Advisors, based in New York City. He was the former managing director of Neuberger Berman. Integre is a money management firm that was established in 2003 and specializes in risk/reward investing. In fact, their mission is to grow and preserve their clients’ worth. And, they’ve been pretty successful at it for the past five years. But, there has been no question that what is going on now has presented problems. Actually, says Weintraub, “It has been one of the most challenging years investors have ever experienced.” As a result, he has put together what he suggests are 10 resolutions for investors to help them navigate the coming year. They are certainly worth detailing here. 1. Never Put All Your Eggs in One Basket. Weintraub very quickly adds that it doesn’t matter how attractive that basket even is. “This relates to the Madoff case but it could apply equally to anything, such as putting all your pension money into the stock of your employer.” 2. Beware of Conventional Wisdom. He has said that when everyone knows something is going to happen, there’s a decent chance it won’t happen. “When oil was $100, everyone knew that we’re running out of oil and that the price can only go one way – up. It’s the same with China – everyone knew this was the Chinese Century – and that investments related to China would go up. There were all these certainties related to emerging markets that turned out not to be so certain.” 3. Know Your Goal. Weintraub’s admitted goal is to preserve wealth from the ravages of inflation. “If your goal is to outperform the S&P 500 every day, then you might chase things that have worked before but are now overvalued. 4. Match Your attention Span to Your Time Horizon. Weintraub believes that if you are investing money for 10 or 20 years, try not to look at those cable news shows constantly. “To watch these things jiggle up or down, when in the end it doesn’t make a difference, is really a huge waste of time – and a way to get worse results.” 5. Know That We Are Living in History. History is not just something that happened a long time ago. And that’s scary because a lot of scary things have happened in the last 70 years. So you have to be prepared for anything to happen now and in the future. You must have some humility to know that you can’t ever know exactly what’s going to happen, which now brings us to... 6. Avoid Leverage. Anything can happen. The problem with leverage is that it cannot only magnify returns up or down, but leverage is the thing that can say: “game over.” A margin call can sell you out at the worst time whereas, if you’re not leveraged, you can come back some other time. 7. Try to Be as Unemotional as Possible Regarding your Investments. Weintraub says that your stocks don’t “love you” when they’re up or “hate you” when they’re down. They haven’t been “good to you.” “They’re just up. Maybe once a year focus on your investments and ask yourself if you would buy the same thing today, and why. If you don’t have a really good reason, sell.” 8. Paper Losses are Actual Losses. Weintraub points out that alot of people say, “It’s not really a loss unless I sell it.” He retorts, “In that case Warren Buffett isn’t actually a billionaire because he’s a billionaire on paper. One can realize a loss and move on.” 9. Don’t Let Taxes Move Your Portfolio. In other words, don’t let the tail wag the dog. Taxes are important, he says, and if one has the opportunity to buy a triple tax-free bond yielding five percent instead of a corporate bond yielding six percent, go for it. “That’s different from not wanting to sell an investment because you have to pay taxes. A lot of people got completely and totally wiped out by borrowing against their stock instead of selling their stock and paying taxes. They got leveraged and forgot they were living in history. It all ties together.” 10. Wealth is Relative. There you go.If you’re down but not out, you’re in pretty good shape. Even if you’re down 20 percent, you can still buy more yield with the remaining corpus--or more gas, more country house, more modern art, or more expensive clothes--than you could before. If you would like to speak with Manny about Integre, the market, or the stocks in his portfolio, contact Davia Temin, Christine Summerson, or Lauren Balog of Temin and Company at 212.588.8788 or e-mail them at news@teminandco.cominfo@integreadvisors.com.. Or e-mail

Many Americans are planning to delay retirement, postpone vacations and reconsider buying or selling their homes as the result of the economy, according to a new survey by the American Institute of CPAs.

Accounting firm Wiss & Co. has created an economic advisory group to help business owners and executives deal with the recession.

Last year, we published for the second time a ranking of CPAs by AUM (Assets Under Management). The response was staggering. We more than doubled the prior year’s number and went over the 200 mark. We had two criteria for consideration: They must be a CPA firm that has a financial planning practice, even as a subsidiary or affiliate, and the financial planner in the office must hold a CPA credential. In the top list were 18 firms that were in “The Billion Dollar Club,” or as we called it, “Wealth Magnet Elite.” We had 87 firms were in “The $100+ Million Club” or “Wealth Magnet Select,” and then 37 in the “$50 Million Club.” In the eight-figure category that we deemed “Rising Stars,” we had another 40. We also delved beneath the surface of just a ranking and unearthed what share broker/dealers, wire-houses, financial services companies, and the like had. We went even further and revealed the areas of financial planning products that each firm recommended in basic categories such as IRAs, 401(k)s, mutual funds, life insurance, bonds, 529 plans, to name a few. The reaction from the accounting profession has been simply wonderful. No one had ever seen such a ranking before we did the first one in 2007 and it opened the door more. Firms clamored for this to be an annual event, and we are complying. We are contacting everyone on our list from last year for updates plus additional firms that have contacted us. The final list will be compiled on May 1 and we will publish the rankings in the July 2009 CPA Wealth Provider. We encourage you to participate. For a copy of the Survey Form, contact me by email (stuart.kahan@sourcemedia.com), or write to me at Source Media, One State Street

New York Governor David Paterson has signed a bill expanding the regulation of CPAs throughout the state.

Here's a smart idea for all you financial planners out there. Target the children of your Baby Boomer clients. Read more on the Accounting Tomorrow blog.

Investors of all ages, and especially Baby Boomers, are increasingly turning to their CPAs to help them grapple with the financial planning challenges they will face leading up to and during retirement.CPAs are often the first financial advisor that investors experience, and with whom they build trust. Since the CPA firm also understands important aspects of their clients' financial picture, a solid foundation already exists for offering the goal-planning and investment advice that today's investors are increasingly seeking.

Accounting Tomorrow extends its deepest condolescences to the family, friends and classmates or Xin Yang, 22, an accounting student at Virginia Tech who was decapitated on Jan. 21. For more on this story, go to the Accounting Tomorrow blog.

Carl Famiglietti is managing partner of Moody, Famiglietti & Andronico, based in Boston. He says that accounting firm management often finds itself locked in a tug of war between applying theory and being pragmatic, a struggle that can dampen capabilities and in some cases, the overall development of a firm. “For firms of fewer than 30 professionals, the tendency to avoid creativity in favor of traditional tactics can create a stifling atmosphere--or worse, it can lead them to rationalize that remaining static in size or approach is justifiable.” He points out that in this difficult economic environment, sustained, substantial growth is very much attainable and to achieve revenue growth that better enables innovation, leaders must drive towards a vision of what their firm will look like when their goals are achieved. In this respect, he says that the approach requires the eradication of three myths: Myth #1: Competition for Worthwhile Business is Too Intense Famiglietti notes that in a needs-based business such as accounting, the economic viability of the entire country depends on CPA expertise and involvement. “This means that although competition is intense (as it is in all fields), there is business for every capable participant.” He says that while large national firms control the lion’s share of the market, open opportunities are all around us. “The keys to capturing these opportunities lie in the investments a firm is willing to make. Some CPA firms view expenses in infrastructure, education, recruiting, and marketing as costs to be minimized. However, for real sustained growth to be achieved, the mindset of CPA firms should be more aligned with some of the best run companies in America.” Myth #2: Good Talent is Hard to Find According to Famiglietti, good talent is everywhere. “Virtually every candidate that enters into an interview process has great gifts to contribute as long as they are properly motivated, empowered, and rewarded for their contributions.” He adds that the ROI on education, regardless of the curriculum, is without limit and it is the only investment that provides sustained agility and immediate adaptability to the many external forces the market may impose upon a firm. Myth #3: Control Rests with the Partners Famiglietti notes that before transparency was an essential ingredient to trust among companies and stakeholders, markets and investors, and providers and clients, relationships were built on seniority. “To win a client’s trust, partners served as exclusive client contacts. Virtually all correspondence needed to be routed across their desks, and accounts were considered in jeopardy should a client be exposed to junior professionals.” He feels that clients relate to all types of individuals. “Indeed, they may relate to less experienced firm members equally if not more than they do to more senior professionals. In the end, clients want reliable and timely results and professionals want a challenge; for those two reasons alone, it is increasingly imperative for more seasoned professionals to yield control to those yearning for experience.” To Famiglietti, growth is often repressed when leadership’s belief in traditionalism and “how things are” exceeds their vision and passion of “how they could be.” He says that firms which experiment continually will find that just as in industries such as technology and pharma, innovation is a risk worth taking. “It is applying a theorist’s passion and creativity that will break the vicious cycle of stagnation and draw a trajectory of progression, talent recruitment, increased revenues, and profitability.” Above all, he concludes, leaders are those who adapt to external factors but do not let their fate be determined by the market. “Those firms that form a management strategy devoid of myths, that remain aligned with their mission, and that create an environment of trust and development will be poised to capitalize on the opportunities at hand.”

Accounting firm Wipfli has created a task force to help companies cope with the financial crisis.

Florida plans to cut the amount of time it takes to process exam scores for CPAs by more than half, reducing what had been a three-month process to less than a month.

Retirement recordkeeping software developer ExpertPlan has acquired Actuarial Enterprises Inc., a third-party administrator of defined benefit and insurance plans.

The American Institute of CPAs, the Chartered Institute of Management Accountants and the Society of Management Accountants of Canada have given awards to three individuals for management accounting research.

Eighty-eight percent of financial advisors now say that their clients are “off-target” for a timely retirement, primarily because of market depreciation, as opposed to 46 percent at the beginning of 2008, according to Brinker Capital, a leading investment management firm, that released the year-end results of its Brinker Capital Retirement Indicator, a gauge of financial advisor sentiment regarding retirement-related issues. In effect, it shows that the clients’ retirement security has been severely jeopardized by ongoing market deterioration. In fact, of the respondents who said they were off-target, some 74 percent claimed it would take between one and five years to make up the retirement savings shortfall. As to the reasons for being so, 97 percent said "market depreciation," 51 percent noted "didn't start saving soon enough," and 47% percent said "general procrastination." Brinker says that the question which provoked the most vigorous response was: "Are you seeing a disconnect between your clients' responses on their risk tolerance questionnaires and the level of risk they are willing to take today?" Some 75 percent of financial advisors weighed in with a resounding "yes." When asked if they think there should be a reassessment of the way clients' risk tolerance is measured, 76 percent also said "yes." Of course, going a little bit further down the road, when asked to comment on whether the government should mandate employee and employer participation in 401(k)s, 74 percent of advisors said "no." Moreover, a decisive 92 percent of advisors said "government should stay out of the management of 401(k)s." Clearly, these are rather strong responses. In addition, consider others such as:

Adaptive Planning introduced the latest version of its on-demand corporate financial planning software, adding new collaboration features, including cell notes and an audit trail.

Henry R. Keizer is global head of audit for KPMG International and also serves as U.S. vice chair, audit, for the U.S. member firm, KPMG LLP.

The Public Company Accounting Oversight Board said the financial statements of non-public broker-dealers now need to be certified by PCAOB-registered auditing firms.