The Financial Accounting Standards Board (FASB) has come out with a new rule with is a doozy.  FASB is one of the entities that create what is called Generally Accepted Accounting Principles (GAAP).

In the May 12th , 2017 New York Times article in the Street Scene section talks about a change. A Little-Known Accounting Change Could Have a Big Impact talks about a rule change in the recording of small investments in other companies.

Current FASB Rule

Currently, under FASB and GAAP, investment in less than 20% of a company’s equity are recorded at cost.  Should the investment not do well, then the company (we will call the company that made the investment, “ACME“) can write down the investment and take the associated cost.  Again, for clarity, the company that ACME invested in, we will call “Road Runner.”

If the Road Runner does well, there is no rule that says the company needs to write-up the investment.  The disservice to the investors of the ACME is they never know that the investments like Road Runner are doing well.  Therefore, FASB decided to address that issue.  In so doing they have created, some major [un-] intended consequences.

The FASB Change

Under the new rules, ACME would now have to show on their balance sheet the market value of Road Runner.  In many companies that are small, it is quite difficult to determine its true market value.  It actually can get quite expensive to have that study done.  Most companies will not have the accounting bench with the prerequisite skill sets to complete proper valuations.  So this rule is a boon to public CPA firms and specialty houses that do valuations.

But wait; I left out the best part.  The rules state that this is not done on an annual basis.  No, that would be a disservice.  Companies need to record this valuation on a QUARTERLY basis.  Can you imagine the stress and strain on companies?  Let’s not even talk about the cost.

So  you’re thinking, one company investment, not that big a deal.  Many companies invest in multiple, scores, even hundreds of small companies.  Now multiple the effect.  Horrendous!

Effects

Our graphic of the ACME Atom Re-Arranger is extremely apt.  If the rule stands, investments by all types of companies into other companies might just stop.  I know from companies I’ve been associated with that this rule with be a game changer and game stopper.  Those companies would not have the resources to pay a firm to do valuations of several investments – quarterly.  The costs in hard dollars and time would just weigh in favor of not investing.

What was the makers of the FASB’s thinking?  Or were they just thinking of the ultimate flow of cash into the public (sic larger) CPA firms and specialty houses?  I’m sure we’ll never know, but this is another rule that makes zero sense.

If you took this rule to its logical extreme, why not use market valuations for buildings and land.  How about every non-current balance sheet asset?  And while we’re at it, how about the true value on some of the liabilities (like amounts that are in dispute that don’t make it to notes on the financial statements).

And the silly changes keep trucking on…..

Effective January 2018, NYS will enact a 12-week Paid Family Leave (PFL) program.

Paid Family Leave

A family member is defined as a child, parent, grandparent, grandchild, spouse or domestic partner. “Serious health condition” is almost identical to the definition under the FMLA. The employer has the option to allow the PFL benefit must NOT to run concurrently with any FMLA entitlement. The program will be run under the NYSDisability Benefits Law (DBL).  This will enable all eligible private sector workers, the right to a leave of absence and guaranteed reinstatement. Continue reading »

Why do we buy a certain brand?  What is it that attracts us and keeps us as customers, especially in this fickle world of diversified selections, price wars, and bombardments of advertising gimmicks?

It is because we’ve grown accustomed to that brand giving us the same experience yesterday, today and tomorrow.  It is consistently.  Moreover, when they try to change the brand, sometimes a civil war breaks out (who remembers changing the Coke formula?).

Well, I’ve been eating Ritz Crackers for more years that I care to admit.  Those crackers where “everything tastes better on”, be it cream cheese, tuna fish or slices of cheese and cold cuts.  The crackers were stiff so you were able to dip, but never hard.

They (notice the past tense) were great and “everything did go better on a Ritz!”

Not any more

Nabisco must be cost cutting again, but the last two boxes of Ritz we consumed were not up to the standards that I expect.  I became a brand customer for a reason; now the crackers just break if you look at them wrong.

I just sat down to some egg salad and Ritz.  I’ll explain this for those at Nabisco who aren’t users of their own products.  I take the cracker, try to scoop some egg salad onto said cracker; then consume cracker and egg salad.  That’s the way its been working for years (you can substitute egg salad for any other food item that is scoupable).

But Nooooooo (think Mr. Bill from Saturday Night Live).  The cracker falls apart.  The ritual of the meal is destroyed.  The taste, the ambiance the mood, ruined.

Nabisco, you’ve destroyed the Ritz Cracker, you’ve destroyed the brand and now it is dead to me.

Having lost that once loyal customer, I hope you’re proud!

Because I’m just sad.

Vishing Definition

The fraudulent practice of making phone calls or leaving voice messages purporting to be from reputable companies in order to induce individuals to reveal personal information, such as bank details and credit card numbers.

“many victims of vishing are people who are not tech-savvy“

Vishing Protection

Please take the following measures to protect  yourself from vishing attacks:

• If you see a missed call from an unknown number on your personal or professional device, do not call back. Your account could be charged if you return the call.

• Hang up if you hear no response after a few seconds of picking up the phone.

• Do not trust your caller ID. Be aware that even if your caller ID displays the phone number and/or name of a legitimate person or company, the call is not necessarily coming from that number.

• Never provide credit card information or other private information to anyone who calls you.

• If you receive a phone call and someone immediately asks, “Can you hear me?” hang up. This recent scam uses your recorded “yes” response to authorize purchases.