Harvard Business School professor Robert S. Kaplan is co-developer of both activity-based costing and the balanced scorecard. In 2006, Kaplan was elected to the Accounting Hall of Fame, and received the Lifetime Contribution Award from the Management Accounting Section of the American Accounting Association. In 2008, the Institute of Management
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TOPICS
Management accounting
Tax Treatment of Rebates May Be Clearing Up
EXECUTIVE SUMMARY The IRS has attempted for many years to categorize rebates as deductions rather than exclusions so that the restrictions of IRC § 162 can be applied. But the courts have allowed exclusion treatment for direct seller-to-buyer rebates. Though the IRS has had some success in the courts
Refocusing on Reliability
EXECUTIVE SUMMARY Current technical literature precludes CPAs from performing review engagements when independence is impaired and requires modifying reports to disclose lack of independence in compilation engagements. The AICPA Reliability Task Force asserts that the conceptual foundation regarding the services CPAs provide to clients should be modified to refocus on
Making the Invisible Visible
Recent research confirms that while most executives agree that intellectual capital is critical to the future success of their businesses, their approaches to measuring and managing this performance enabler are either poor or nonexistent. This has provided the impetus for the AICPA, in conjunction with CMA Canada and CIMA, to
Managing Multiple Identities
EXECUTIVE SUMMARY Identity management addresses the difficulties encountered when one physical user has separate user IDs and passwords on multiple systems and applications. Access management addresses the challenges associated with the specific access rights and permissions of multiple user IDs. Large, complex organizations have the greatest potential to benefit from
Subjects of Substance
Your issue of May 2008 may well stand among the best journalism in our profession, with not only the codification of GAAP (“Framing the Future,” page 40) but a thorough discussion of the late crisis in the subprime mortgage market and the role of accounting there (“The Role of Fair
Fair Treatment of Fair Value?
The Journal of Accountancy ’s May 2008 discussions of fair value “accounting” (“The Role of Fair Value Accounting in the Subprime Mortgage Meltdown,” page 34), more correctly described as fair market valuation, are interesting. Each opinion on this subject presents a compelling argument. Fair Value vs. The Audit Debates on
A Better Way to Gauge Profitability
EXECUTIVE SUMMARY Return-on-equity (ROE) is the correct profit metric to evaluate the performance of a business. However, the primary emphasis on financial ratio analysis must be on operating performance. The “advanced” version of the DuPont model remedies the original model’s failure to cleanly separate the effects of operating and financing
Managing Corporate Divestiture Transactions
EXECUTIVE SUMMARY Corporate divestitures, the sale of stock or assets of a segment of a business, are an important class of business transaction by virtue of their pervasiveness (more than onethird of all M&A activity in a given year) and their size (averaging more than $175 million per deal). Divestitures
Internal Controls
The Committee of Sponsoring Organizations of the Treadway Commission (COSO) released an exposure draft, Guidance on Monitoring Internal Control Systems . Developed by COSO through a process led by a Grant Thornton LLP team, the guidance is designed to help organizations monitor the quality of their internal control systems. “This
Currency Translation Adjustments
EXECUTIVE SUMMARY Accounting for currency translation risks can be very complex. This article addresses only the basics and provides some tools to help the reader understand the issues and find resources. Globalization has changed the old accounting rule that debits equal credits. Net income became just one part of comprehensive
Unleash the Power of Lean Accounting
EXECUTIVE SUMMARY Lean accounting concepts are designed to better reflect the financial performance of a company that has implemented lean manufacturing processes. These may include organizing costs by value stream, changing inventory valuation techniques, and modifying financial reports to include nonfinancial information. Value stream management (VSM) is a
Creating Growth: Using Opportunity Risk Management Effectively
Authors’ Note This article is based on Managing Opportunities and Risks , a Management Accounting Guideline written by Tamara Bekefi, Marc J. Epstein and Kristi Yuthas and published by the AICPA, the Society of Management Accountants of Canada and the Chartered Institute of Management Accountants. AICPA members can download all
More Perspectives on Audit Committees and ERM
We are offering additional commentary on the article titled “Rising Expectations: Audit Committee Oversight of Enterprise Risk Management” (April 08, page 44). I am an internal audit director and part-time NYU faculty member running an ERM consulting business in New Jersey, together with another practitioner and colleague in New York.
Executive Pay Growth Outpaces Revenue
EMPLOYEE BENEFITS In the year from February 2007 to February 2008, total overall executive compensation, including salary, bonuses, stock options, pension and other compensation, in domestic publicly traded companies increased 20.5%, according to a new study, while revenues increased just 2.8%. The study was conducted by ERI Economic Research
Post-Transaction Adjustments
More and more, global companies are discovering that year-end adjustments to intercompany transfer pricing can improve the accuracy of their transfer pricing tax reporting and, potentially, help prevent overpaying taxes by millions of dollars. However, increasing scrutiny by tax authorities in the United States and other key countries makes it
Rising Expectations
Recent events such as the massive trading losses at Societe Generale, the subprime lending crisis and product recalls associated with Mattel’s international toy manufacturing operations continue to shock financial markets and negatively impact shareholder value. These events have also fostered rising expectations for boards of directors to exert greater oversight
Focus on Compliance
On average, compliance spending is outpacing growth of net income at the nation’s largest financial and thrift institutions. A Deloitte Center for Banking Solutions survey found that compliance spending as a percentage of net income rose to 3.69% in 2006 from 2.83% in 2002. Respondents also recognized that compliance is
Communication Is Key
Catherine Allen et al.’s article (“Navigating the Crossroads of Control and Independence ,” Dec. 07, page 42) was an excellent article clarifying the guidance in Statement on Auditing Standards (SAS) no. 112 as it applies to private company auditors’ responsibilities of communicating internal control matters. Page 46 of the article
Take Your New Team to the Top
EXECUTIVE SUMMARY Vision. Start with a clear vision of a finance team that is involved in the business and engaged in key management decisions. Stakeholders. Identify and engage key stakeholders right away. Conduct structured interviews to identify what is most important to your internal clients. Current Organization. Immediately
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How to find the right CAS clients
The key to success with CAS is selecting the best clients. Tools like ideal client profiles (ICPs), buyer personas, and even artificial intelligence can help identify the businesses that best fit each CAS practice.
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