The National Public Accountant

Accounting Scene Changing economic conditions, requirements and information have resulted in changes in the way accountants practice their profession. Such changes can come in the form of accounting methods, accounting estimates and reporting entities. Regardless of the type, such changes are intended to make financial statements more accurate and useful. Questions which can guide accountants in identifying accounting changes are presented.

Alternative LIFO method for car dealers.

Last-in first-out - Debits and Credits Car dealerships traditionally use the dollar-value last-in first-out (LIFO) method when preparing their ending inventories. However, this technique requires the use of confusing pools which ignore individual inventory items. An alternative LIFO method which allows dealers to use simplified and more natural pools for new cars can be more useful since it provides definite, objective guidelines. The mechanics of the alternative procedure are presented.

Not quite: just in time inventories.

The Japanese concept of just-in-time (JIT) inventory systems have been beneficial for many companies. However, JIT systems pose a special problem for auditors since it features many costs which are difficult to identify and quantify. In addition, JIT underemphasizes the cost of not maintaining any inventories. Companies can achieve cost savings by maintaining a low level of inventory.

Oklahoma House Bill 2340: a report by the OSPA legislative chairman.

Oklahoma Society of Public Accountants - Washington Comment Oklahoma House Bill 2340 is a measure designed to limit the number of accountants being licensed in the state. The bill's original provisions called for more stringent licensing tests, prohibited further licensing of certfied public accountants, enjoined unlicensed accountants from preparing compilation reports, and imposed a rigid review process. Some quarters criticize the measure for unduly favoring the big six accounting firms.

Reading the warning signs: assessing the risk of litigation in audit engagements.

An increasing number of lawsuits are being filed against public accountants. Businesses which go bankrupt often attribute it to audit failure and use the accountant as a scapegoat for bad management. Although majority of such lawsuits are dismissed, they still exact a toll on accountants since litigation is not a cheap activity. A model for assessing the risk of litigation to the auditor is presented.

SEC loses in trial against auditor Price Waterhouse.

Guest Column Price Waterhouse recently won a case filed by the SEC against it. The SEC had charged the accounting firm with violation of the antifraud provisions of the Securities Exchange Act of 1933 and 1934 and for aiding and abetting such violations. The judge trying the case ruled that the allegations of the SEC were highly improbable. The favorable decision demonstrated that the judiciary can be capable of comprehending highly technical accounting issues under litigation and thus rule on them proper...

Tax talk.

Tax accounting The provisions of code S338 allow corporations which have made qualified stock purchases to treat the transaction as an asset purchase. However, code S332 states that a corporation which owns 80% or more of another corporation does not recognize gain or loss on a liquidating distribution of property. A 1988 ruling by the IRS clarified that a corporation which purchases another firm cannot treat the transaction as an asset purchase.

The A word: where do we go with it?

Accountants A recent California Supreme Court ruling allowed unlicensed accountants to use the title 'accountant' but such usage must be accompanied by a disclaimer to prevent confusion with certified public accountants. However, neither the court nor the California Society of Enrolled Agents have not yet issued any specific guidelines as to how unlicensed accountants can use the title. A guide on how to avoid prosecution when using the title is presented.

The imperfect standard: why all cashflow statements still aren't created equal.

Cash flow statements are extremely important since they indicate a particular organization's ability to generate favorable cash flows. Financial Accounting Standard number 95 (FAS 95) provides accountants with a standardized format for the preparation and presentation of cash flow statements. However, the FAS 95 definition of cash flow activity sections allows some items to be classified under several headings. As a result, FAS 95 falls short of the level of comparability it was designed to a...