ANTHONY H. CATANACH JR. is an associate professor in the School of Business at Villanova University, as well as the Cary M. Maguire Fellow at the American College Center for Ethics in Financial Services. His professional experience includes five years as an audit manager with KPMG and six years in the financial services industry. Dr. Catanach has received numerous awards for his publication, teaching, and curriculum innovation efforts. He has authored numerous articles on a variety of accounting, finance, and management issues, as well as several business education texts..
Groupon has suffered through several financial restatements, revisions of its revenues, SEC criticism of its non-GAAP performance metrics, internal control weaknesses over financial reporting, and public critiques of its reported operating cash flows. One would have thought that Groupon might have learned its lesson about the importance of accounting quality and financial reporting transparency. But no! The Company’s latest 10-Q suggests that financial reporting quality remains less than stellar and that management has not learned its lessons. The stock market has added its exclamation point as the price has dropped to all time lows. Continue reading »
Deferred tax assets and deferred tax liabilities remain bizarre and frequently misunderstood members of the financial statement community. Whatever they may be, it is doubtful that the former are assets, or that the latter are liabilities. Likewise, to measure income tax expense as a function of financial reporting income is peculiar because Congress and the IRS assess income taxes on an idiosyncratic number called taxable income, NOT some financial reporting number. Continue reading »
The Financial Accounting Standards Board (FASB) is getting around to addressing the disclosure catastrophe that has befallen our beloved financial statements. Yes, in case you haven’t noticed, the financial statement notes (the report content that really matters) have disintegrated into a series of disorganized, generic, boilerplate text references that can at best be called tedious, and at worst uninformative and misleading. Since the financial report implosion of 2002, today’s financial reports have doubled in size but supply only half the information. So, FASB’s recent invitation to comment on its Disclosure Framework is a Christmas gift in July. Continue reading »
We first voiced our concern about an obscure accounting rule that allows companies to “create” profits when purchasing other businesses in the “Curious Case of Miller Energy’s 10-K and Its Huge Bargain Purchase.” The offending tenet relates to the treatment of something called “negative goodwill” which purportedly is created when a company makes an acquisition, and pays less than what the assets are worth. Continue reading »
From time to time, our readers have asked us for our “must read” list of accounting and financial analysis texts. Several have made this request recently, so here it is, with one major caveat. Since our readers have diverse skills, interests, and experiences, it is unlikely that our list will match each individual’s goals. So, at best we hope to satisfy the educational needs of as many readers as possible. At worst, we might have provided a remedy for insomnia. Continue reading »
J. EDWARD KETZ is an associate professor of accounting in the Smeal College of Business at Pennsylvania State University. He has a bachelor’s degree in political science, a master’s degree in accountancy, and a Ph.D., all from Virginia Tech. Professor Ketz has been a member of the Penn State faculty since 1981. He also has taught at the University of Connecticut and the University of Maryland. Professor Ketz has authored and edited 17 books including Hidden Financial Risk (Wiley, 2003) which examines the corporate culture and the institutional setting that engendered recent accounting scandals. Dr. Ketz has been cited in the popular and business press, including The Wall Street Journal, The New York Times, The Washington Post, Business Week, and USA Today. He also has appeared as an accounting commentator on CNN, National Public Radio, and Bloomberg Radio.