Professor Elam

A Taxing Question

Now Tom Daschle joins Tim Geithner in not paying taxes, even more so. Daschle had to pay over $100 K in back taxes to get even, Tim was on the hook for $43,00. As someone who has represented several clients before the IRS, do not try this on your own thinking you will get the same treatment. No one likes to pay taxes, even Secretaries of the Treasury and Health and Human Services.

US Air Can't Please 'Em

US Airways has offered a First Class upgrade when available to fly free for the next year to those passengers on the now famous Hudson River Landing. Gee, already some are running for attorneys saying they fear getting on a plane, others say it is just not enough.  Gee what exactly did the Cunard Line did for those folks on the Titanic?  The ones who did not get lifeboat seats that is...

It is a mere one hundred years since the Wright Brothers at Kitty Hawk.  Regular passenger service began in the 1920s. But it was the DC 3 in the 1930s that really made commercial flying a reality. Seventy years later everyone thinks planes apparently should not land in the river. 

And to think, not that long ago, a good landing was 

One you could walk away from.

Perhaps we should take this up in Ethics class! 

GM Chrysler End Jobs Bank

The UAW created jobs for life whether there was any work or not.  This was the Job Bank in which workers got paid for well not working.  This led to GM manufacturing Buicks sold to car rental companies as the CEO figured he might as well have the workers doing something.  This has cheapened the former upscale brand to the point that it is well received in China but not here.

Congress demanded an end to this, and even the UAW had to go along. I suspect that Congress will keep GM ie the UAW alive with incentives to build green cars, which sell in such small numbers it will make no real difference. Still GM will wink and use the money to stay in business.  After all every UAW member is a potential Democrat voter and the Democrats are now in charge.  No doubt the Democrats will make a big issue that the Republicans like Saxby of Georgia would have let GM go bankrupt. Saxby of course has no GM plants in Georgia, but does have foreign headquartered auto makers. There are 22 states with right to work laws and they have attrracted all the new auto plants, such as Toyota in San Antonio.

Test Your Accounting Acumen

A H Belo, parent of the Dallas Morning News, is laying off another 500 people.It is borrowing money to stay in business and fund the layoffs. This has resulted in a restriction on dividends it can pay otherwise known as a loan covenant.

Gannet has written down its goodwill account, why, what do you know about accounting that would answe5r this question?  Look up impairment in the Intermediate text for the answer.

We study accounting to be able to read and interpret such articles.

Belo stock is down to $2. The Christian Science  Monitor has gone weekly, how long before others joint their lead?

Reducing Audit Fees in Small Companies

Yesterday I suggested that you should be scanning business, cpa, and cfo.com websites to discern developing trends. Here is a good example.  This is a CFO article highlighting a report by the PCAOB. In the report the PCAOB explains how an alert CFO can reduce audit fees for by maintaining for example efficient bank reconciliation. If the external auditor is satisfied that this internal control is in place, the external auditor can reduce substantive procedures of further examination. This would be the result of analytical procedures that survey compliance. 

 It is necessary to read such to get a feel for the context in which accounting happens. 

Toyota to Cut Employees

Here is a blog post noting events in Japan. 

As he says in perspective a cut back in employees here will be minor for Toyota. But stop and think,

if one had predicted disaster for the toyota plant here just two years ago, one would have been hooted out of town. But that is what happened, in its first major strategy mistake, Toyota bet on big pickups and gasoline prices soared and the economy collapsed, they should have stuck to their knitting and left that market to GM and Ford and Ddoge, after all they have most of the formerly small pickup now a large pickup itself market.  

Predicting social outcomes is not physics, trends can change radically as the author of The Black Swan points out. 

It's All About Skill Sets

John Stossel cuts thru a lot of clutter on 20/20. In this article he skewers the idea that any college degree is worth a lot of money to the graduate, clearly this is simply not true. When I was teaching at UNT Dallas we interviewed multiple counselors with masters degree who were only making $30,000 a year, about what a shift supervisor with a high school degree  would expect at a retail outlet. 

You have made the right decision to pursue an accounting degree and a certification, if indeed you do just that. But this is not a matter of passively thinking 

college admission plus attendance equals degree equals success

You must be able to demonstrate real understanding on the job, not to mention on an examination should you take on. I am not here to rag on other majors, everyone can major in whatever they want but the outcomes are clearly known. There is a huge demand for promising accountants. There is not and never will be a huge demand for also rans ( in plumbing, accounting, art history or anything else)  except in market bubbles of excess demand that rarely last. 

Again I urge you to commit and arrange your life now gearing it to a successful outcome in your studies. 

What does that mean?

Get up earlier in the morning. Review the learning objectives or the outline in Gleim or Schaum's for your class. Write down those objectives in your own handwriting. Work the example prolbems  in each chapter until you can work the entire problem successfully on  a blank sheet of paper. google for articles on what we are studying like tax stimulation or mark to market, what are movers and shakers saying. 

Start getting ready for the day. Turn on CNBC, listen to what they say, forgo fluff like Good Morning America or ESPN. 

Subscribe to Business Week and CFO, read the magazines on the weekend with a yellow underliner in hand. 

AT work get the budget for your organization, read it, study it, where is more money being spent, why?

Log on to cpa firm websites here in san antonio, what are they doing, what are they looking for in terms of talent. 

Look at major corporate sites here like Holt CAT or Valero. What are their goals, what skill sets are they seeking in graduates?

Take your outlines to work, let everyone there see you reading them on your breaks, make a statement by your actions.

Work the homework problems before you get to class, copying off the board without having read or attempted the problem is worse than useless, it is a waste of your time, you are taking a shower in a raincoat,  understanding is not taking place. 

We are here to help, I am here on campus a great deal of time, come see me, schedule a meting. let's make this happen. 

Mere familiarity with the topic will not lead to success, content mastery however will lead to success.

CNBC at Davos

It is 7:18 AM and I just heard an excellent discussion on mark to market accounting rules between Becky QUick  and Steve Forbes on CNBC.  I mentioned arranging your life for success a couple of posts back, and this is what I am describing.  You are not going to LEARN accounting but just putting your toe in the water a couple of times a week listening to me in class and avoiding reading the book. You must jump in the ocean that is finance and accounting.  

Forbes advocated eliminating mark to market which would eliminate a lot of the problems. He also advocated eliminating payroll taxes, that would be SS witholding. He also advocated having FNM buy mortgages form banks.  We are studying all these terms and issues in various accounting classes now. It is nec

My point is that you must link the text, the outline in Gleim, my description in class and on WEB CT of derivatives with all this news to form a synthesis in your mind of how all this fits together. 

Watch Squawk Box in the morning on CNBC as you get ready for your day. Every day I see students watching basketball games  on the tv in the activity room. This will not advance your business knowledge.......As Mike Phelps swim coach says,

Get in the water....

Remittances to Mexico Down

REmittances sent to Mexico have been much larger than the Mexican government anticipated.

Indeed there are more stories of fewer coming to America. As the construction industry evaporates in Nevada AZ, CA, and folks decide to mow their own lawns such traditional migrant jobs are disappearing. It could well be that we are seeing a seismic shift in immigration patterns.  Take a read on this articlle, interesting.

Layoffs on the Increase

First the market tanks, then the reality of its predictions hit. Layoffs are on the increase suggesting that real estate and autos are going to permanent new lower levels. Let us hope that is the case. 

The Statler Brothers song The Class of 1957 noted that one grad sold insurance and part time real estate. that is the way real estate was back then.  the inflation of the 1870s and 1990s convinced millions, mostly folks well dressed without the benefit of a college degree, that they could make a full time living selling commission real estate, at a fat 6% commission.  I suspect that for millions that is over.  And frankly the 80/20 rule held, as best I could tell most of them were not really making a living at it but simply hung out an an office occasionally listing a property in the hope that someone else would sell it and they wold make some money. 

The Motor Mile south of Austin or the SA dealerships spread along the freeways speak to overcapacity in autos.  My guess is that GM's problems will give the Dem congress an auto company to play with as they pay to keep the UAW from going out of business. From that standpoint GM is depending on the UAW I guess to keep money coming from Congress.