UK GDP: Osborne hails triple-dip escape as sign of 'healing economy'

But Labour and economists insist the figures don't add up to a recovery

George Osborne has hailed news that the UK escaped a triple-diprecession in the first quarter of 2013 as evidence that the coalition's policies are helping to "build an economy fit for the future".

After a challenging week, in which the International Monetary Fund urged him to ease up on his austerity policies, and Fitch became the second agency to strip the UK of its AAA credit rating, the chancellor welcomed the 0.3% growth in GDP announced by the Office for National Statistics (ONS).

"Today's figures are an encouraging sign the economy is healing," he said. "Despite a tough economic backdrop, we are making progress. We all know there are no easy answers to problems built up over many years, and I can't promise the road ahead will always be smooth but, by continuing to confront our problems head on, Britain is recovering and we are building an economy fit for the future."

A second quarter of contraction, after the 0.3% decline in the final three months of 2012, would have met economists' standard definition of a recession, fuelling Labour's argument that the coalition's cutbacks have choked off recovery.

But despite the unexpectedly strong growth figure, the shadow chancellor Ed Balls pointed out that GDP remained at the same level as it had been six months earlier. The ONS said the economy had been "broadly flat" over the past 18 months.

George Osborne welcomed the 0.3% growth figure announced by the ONS: 'Britain is recovering and we are building an economy fit for the future.'

"If we're to have a strong and sustained recovery and catch up all the ground we have lost over the last few years, we need urgent action to kickstart our economy and strengthen it for the long term – as Labour and the IMF have warned," Balls said.

According to the detail of the ONS's figures, the upturn in GDP was driven by growth of 0.6% in the key services sector, which includes retail and transport and makes up more than three quarters of the economy.

Industrial production also expanded, by 0.2% – though much of that was accounted for by rising North Sea oil and gas production. Activity in the hard-hit construction sector declined by 2.5%.

The business secretary, Vince Cable, said: "Today's figures are modestly encouraging and, taken alongside other indicators such as employment figures, suggest that things are going in the right direction."

Sterling hit its highest level against the dollar in two months after the news, rising by a cent and a half to $1.5450, amid speculation that the Bank of England will be less likely to expand its emergency quantitative easing programme against the background of a healthier economy.

"From a policy point of view, the signs that the UK economy may be growing, albeit weakly, are probably enough to put to rest any chance that the Bank of England would expand QE in May," said David Tinsley at BNP Paribas. Three of the nine members of the Bank's monetary policy committee voted for an expansion of QE at its April meeting.

A return to modest growth may also help to strengthen Osborne's hand in the tough negotiations with ministers over individual departmental spending plans, to be announced in June's spending review.

"Today's figure should provide some cover for the chancellor to continue on the path of fiscal austerity; we do not expect any major changes in the deficit reduction plan, at least this side of the general election," said George Buckley of Deutsche Bank.

However, Tony Dolphin, chief economist at the Institute for Public Policy Research, said the big picture revealed by yesterday's figures was one of an economy that was "stuck in a rut". The ONS said GDP was 2.6% below its pre-crisis peak in 2008, making the recovery weaker than that from any recession since the 1930s.

"Normally, we would expect the economy to grow by around 12% over any five-year period," said Dolphin. "The fact that it has contracted by 2.6% instead means almost 15% of potential output has been lost, along with the employment opportunities and tax revenues that would have accompanied it."

David Brown of New View Economics said: "The government have been very, very lucky. They have avoided a third dip into recession by the skin of their teeth. There is nothing to celebrate over as the UK economy is not out of the woods yet."

IMF officials are due to arrive in London next month to scrutinise the government's tax-and-spending policies, as part of its annual health check of the economy, after chief economist Olivier Blanchard accused Osborne of "playing with fire".

Dhaval Joshi of BCA Research said the government's continued commitment to austerity was in contrast to the shift in approach from the eurozone countries, with Greece, Spain and Portugal being given extra time to reach their deficit-reduction targets. He argued that planned cuts would depress growth more dramatically in the UK between 2012 and 2015 than in crisis-hit Italy or Spain.

"Just like the UK, the monetary union's third- and fourth-largest economies have been in extended, austerity-caused economic stagnations. But for Italy and Spain, peak austerity is now over," he said.

"The UK government shows no sign of budging from its plan A, while euro area policymakers are signalling a shift away from aggressive fiscal consolidation."

Despite the snow and unusually cold weather in the first three months of the year, the ONS denied that the weather had had much impact on the figures. While retailers suffered in January and March, that was partly offset by increased demand for energy from householders turning up their heating.

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Article source : http://www.guardian.co.uk

Bank of England faces knife-edge decision on bond buys

The Reuters study associated with economists the other day confirmed a 40 % chance of the financial institution choosing a lot more quantitative easing next week's two-day coverage meeting, and a 60 % possibility before the 12 months has gone out.

Because which study has been carried out, several economic experts have transformed their particular call and cash marketplaces declare that the actual possibility is actually better 50 %. The rise in QE expectations provides weighed about the single pound, driving that to some 2-1/2 12 months reduced up against the dollar.

"It's a really close contact,Inches said Ross Jogger, United kingdom economist at RBS.

"My view is that they holds fireplace this kind of thirty day period, however at least there are here that the Bank is very very happy to seem dovish.Inch
The united kingdom's main bank has recently acquired 375 billion lbs associated with gilts, roughly the same as 26 % regarding national earnings, much outstripping the federal government Reserve's QE work that makes up about 14 percent.
Inspite of the BoE's initiatives in order to stimulate the economy via producing money, Great britain is at threat regarding falling directly into it's third tough economy within 4 years and concern is increasing in what many identical would accomplish.
The particular Uk Compartments regarding Business, that reduced its progress estimations about Thurs, said financial coverage, and also targeted steps to support company expense, would be far better compared to driving financial plan further in to currently charted waters.

"More QE would only supply limited rewards for your economic system, while elevating longer-term risks of economic frame distortions, bubbles and higher inflation,Inches mentioned BCC economist David Kern.
PUSHING Over a Bit of Stringed?
The actual Lender's policymakers usually do not manage to share these issues, nevertheless. While they think interest rates, from 2.Five percent, go as little as they are able to, they think QE still has a few usage remaining.

Deputy governor Robert Tucker, that didn't prefer much more connection buying in Feb, mentioned the other day which "nobody around the panel considers that QE provides attained the end of the road which is not a helpful device anymore".
Minutes to be able to last month's meeting confirmed three with the bank's nine economic policy panel members had been currently confident of the need for more QE.
The truth that Governor Mervyn California king was one of them is critical. The past time he was inside the minority was final Summer and also the pursuing thirty day period he got his / her approach.
King is going to be replaced in Come july 1st by Financial institution associated with Canada Governor Indicate Carney, who is likely to have a practical way of getting Britain's economic system growing again.
The Monetary Occasions reported about Thursday in which Chancellor George Osborne might declare new forces with regard to Carney as well as the Bank regarding Great britain from his March 20 spending budget declaration, although the document didn't report options or perhaps specify what are the powers would be.
Any fund ministry speaker declined to discuss the particular Foot article.

Osborne said openly within 12 , that he might pleasant a discussion about the main lender's remit. Despite the fact that this individual extra the bar to alter will be higher, some financial experts see a chance of minimal adjustments to provide the financial institution added freedom more than just how long it enables inflation to be able to overshoot A couple of per cent target.
Those arguing in opposition to more stimulus previously point to The united kingdom's sticky the cost of living which is presently at 2.Seven per cent and not anticipated to go back to goal until early 2016.
The lb provides decreased 6 percent on the trade-weighted index because the introduction of the year, that means higher transfer charges is only going to worsen cost demands.
So far, the bank's policymakers seem to be confident with the actual currency's weak spot. Indeed, several financial experts suspect that the willingness to discuss unusual plan obama's stimulus can be a strategic make an effort to discuss the particular forex reduce and also obtain aggressive advantage.

Tucker brought up the thought a week ago from the financial institution charging financial institutions to park money on the key financial institution, a thing that can encourage these to lend more to be able to organizations in an attempt to enhance progress.

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Amazon expected to reveal cash pile of up to $9bn after record Christmas

Analysts say online retailer's reserves have swollen as row rages over tax contributions

Wall Street is forecasting that Amazon enjoyed larger than ever revenues of $22bn for the December quarter.

Record Holiday takings have got inflamed Amazon's funds stack to as much as $9bn (£5.7bn), the online retailer is anticipated to be able to state in final results which will inflame the talk over it's tax contributions around the world.
In only Thirteen weeks, Amazon's cost savings, that are located in funds as well as opportunities, have got expanded to between $7bn and $9bn, through $5.2bn inside June, point out professionals. The particular group's overall performance aided topple numerous it's UK high street competitors, using the camera shop Jessops and also songs shop HMV starting management earlier this year.
Great britain generates approximately 10% of Amazon's revenues, driving the amount from the money stack collected within the Uk to an believed $900m.
The merchant will be beneath fire for having to pay lower levels of business duty in the united kingdom along with other marketplaces. Together with political figures across European countries spreading regarding for methods to restore community finances, the amounts are usually eye-catching. The matter is going to be forefront this week because parliament's powerful community company accounts panel cvs it's query in to taxes prevention through proof about Thurs in the four biggest accounting organizations.
Inside the points of interest of several MPs will be the major All of us businesses that utilize a complicated internet regarding overseas havens to reduce their duty payments. Filings by Apple possess exposed it is placing $1bn weekly past the achieve with the UK as well as US taxes authorities. The actual apple iphone maker provides amassed $11bn within just offshore havens during the last three months regarding This year and safeguarded $94bn coming from taxes regulators around the globe, largely because 2005 whenever apple iphone product sales shot to popularity.
Wall Avenue is actually predicting in which Amazon online marketplace enjoyed larger than at any time profits associated with $22bn for that December 1 / 4. The particular store ongoing in order to earn share of the market from high-street retailers on the joyous season, according to RJ Hottovy, a great analyzer in the Us all dealer Morningstar who puts Amazon's supplies at between $7bn and also $8bn.

"Governments are looking to corporations a growing number of and also re-evaluating what the proper taxes harmony ought to be,Inch said Hottovy. "It's an extremely actual threat for the business, yet Amazon online marketplace, offered they've lower expenses along with a sizeable cash position, will be thoroughly protected.Inch
The particular dealer Sanford D Bernstein predict $8.5bn inside Dec, but claims the total may have altered since the business has grown the credit card debt. Debt payments may be counteract against earnings in order to reduce taxes charges. Current expenditures could also possess ingested directly into money.

Morgan Stanley computes $9bn within cost savings, along with $6.8bn in money and also the balance inside short-term opportunities including gives, government debt and corporate ties.
In the last count, more than $3bn was held within foreign currency, including euros, sterling, Japanese pound and also Chinese yuan.
In 36 months from '09 to be able to This year, Amazon online marketplace gained more than £7bn in britain however compensated simply £2.3m in business duty, regardless of employing Fifteen,Thousand people in the united states, because of any structure that hard disks sales through a Western head office within Sweden.
The latest printed salary is for This year, if the UK generated £3.35bn within sales, about any 10 of its $48bn inside globally product sales.
Amazon online marketplace said in the latest filings that it's currently becoming attacked with regard to delinquent duty by the All of us and also French governing bodies. This encounters $1.5bn in additional federal income taxes more than a seven-year period of time, beginning in 2005, at any given time when company accounts show this begun to amass huge amounts of cash in Luxembourg. Amazon failed to respond to requests for remark.
Like Search engines, Starbucks as well as other multinationals, Amazon online marketplace as well as Apple company legitimately funnel income from countries including the UK as well as Portugal by means of obligations to subsidiaries, typically as lending options or even royalties with regard to intangibles for example utilisation of the brand name or perhaps engineering produced in-house.
France dished up notice in June with regard to past due taxes adding up to $252m, which includes attention and penalties, for the a long time through 2006 to The year 2010. Regarding the UK, along with a variety of other nations around the world, Amazon's filings state it really is or perhaps may be subject to inspections heading back in terms of The year 2003.

Prem Sikka, professor regarding accounting with Kent Business College, said HM Revenue as well as Customs might claw again a number of Amazon's financial savings by looking at regardless of whether obligations between the organizations regarding items such as royalties had been arranged at a fair price.

"Part from the basis for these cash heaps is that companies have took part in intricate constructions and also prevention schemes in order to refuge earnings from United kingdom business tax, and there isn't any reason HMRC can not look into this kind of. HMRC is actually flawlessly eligible to problem the cornerstone associated with a computation."
This individual informed against leaving aggressive taxes techniques unrestrained: "If you deteriorate the tax bottom you can not have type of successful government. We have allowed a very strong tax deterrence business being set up and once an industry created it will become very difficult to eliminate that."

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Loans, optimism scarce for most small businesses

For entrepreneur Maurice Lopes, the plight of today’s small business owner is epitomized by a cartoon that depicts a bunch of people staring through the window of a bank, while a policeman swings a club to try to get them to disperse.

Lopes said the punch line read: “What’s the matter? Never seen somebody get a loan before?”

All joking aside, Lopes confessed it’s not a pretty picture for startups and small firms trying to raise what he called “gap funding” of less than $500,000 in the current economy.

Earlier this year Lopes, a serial entrepreneur who also runs catering and dog-walking businesses, launched EarlyShares.com crowdfunding platform to try to fill the funding void. The site stemmed from his own frustration with being turned down for a $500,000 loan to expand his three-year-old Miami-area catering company – Kiddie Catering – because his bank needed him to show two years of consecutive profits.

“Banks are not lending to small businesses to start or expand,” said Lopes, whose catering business employs 25 people and is on track to pull in revenues of $400,000 this year. “A lot of commercial real estate transactions are getting SBA (Small Business Administration) loans, but not to small businesses for working capital.”

EarlyShares is similar to Kickstarter, but with one major difference. “We don’t have projects, we have companies,” said Lopes, who has signed up 1,500 small businesses and more than 30,000 investors since President Barrack Obama had the crowdfunding portion of his Jobs Act legislation approved last spring.

The Securities and Exchange Commission (SEC) still has to finalize the regulations around it, which Lopes expects to be done by the end of March. Until that time, Lopes said they are blocked by “a Chinese wall,” because his company is “not allowed to show general unaccredited investors investment opportunities.”

EarlyShares acts like a funding matchmaker, pairing companies seeking between $100,000 to $500,000 with investors, who can lend them as little as $100 in return for a 5 or 6 percent dividend.

For the purposes of getting more bang for their buck, Lopes encourages investors to spread the money around in small increments. “Don’t put $2,000 in one company, put $100 in 20 companies, because 50 percent of them might fail and you want to be able to have a return.”

While funding remains scarce at the lower levels, SBA lending for the top 13 U.S. banks grew by $11 billion from September 2011 to September 2012.

Wells Fargo & Company (NYSE:WFC), the country’s largest lender of SBA 7(a) loans, last month reported the bank topped the $1 billion total for the second-straight year – the first time it has ever done so.

While it acknowledged most of those loans were for “rent replacement” as small business owners borrowed money to buy the buildings that house their companies, Wells Fargo’s SBA lending head Dave Rader said the average loan size was $391,000.

Rader also said he’s seeing “savvy borrowers with better financial statements.”

However it’s not all roses. A new Wells Fargo poll showed small business owners are feeling extremely uncertain about the economy in the wake of the impending fiscal cliff and Obama’s election win, according to the bank’s head of small business lending Marc Bernstein.

“The striking change has occurred in the future expectations index, where we’ve seen the biggest decline in years,” admitted Bernstein. “That’s primarily related to people’s anxiety about the whole fiscal cliff issue and the uncertainty around Washington right now.”

The Wells Fargo/Gallup Small Business Index fell 28 points, from a positive reading of 17 to negative 11 in the post-election survey of 607 small business owners conducted November 12-16.

Bernstein said the survey results could also have been negatively impacted by the stock market slump that accompanied the election results, but described the quarter-to-quarter drop as “dramatic.”

One of the most concerning areas of the poll was in regards to the hiring expectations of small business owners over the next 12 months. About 20 percent of respondents said they intended to decrease the number of jobs at their companies in the next year – the largest percentage in the survey’s nine-year history.

Additionally, nearly 30 percent of business owners expect lower revenues in 2013, up 11 points from the prior reading and the highest percentage of small businesses expecting decreasing revenues since 2009.

Bernstein said if the debt-deal talks in Washington continue unresolved and fiscal fears spillover into the New Year, then Wells Fargo could start to see a reduction in the number of small business loans.

“If the decline in revenues occurs that people worried about in here, I would expect to see some poor performance.”

Article source :http://uk.reuters.com

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Small businesses face holiday expense filing crunch

While many of us are making merry, it’s hardly the most wonderful time of the year for the accounting staffs at many small businesses.

A rush by employees to submit their expense claims so they can be reimbursed before the holidays, makes today the busiest expense-filing day of the year, according to data from online accounting services firm Concur (NASDAQ: CNQR).

New Year new Passion 

On this day U.S. small businesses will process more than twice as many expense reports as the daily average. That’s a lot of unhappy accountants.

Putting off those expenses has a whole host of repercussions, including paying more money in federal and state taxes.

“It’s like sitting in a car and letting someone drive you down the Autobahn going 80 miles an hour with their eyes are closed,” said Nicole Fende, a financial consultant and president of the Small Business Finance Center. “You’re going to crash and it’s going to be bad.”

Fende added that every dollar not expensed costs a business roughly $1.35 in taxes. That figure is derived from adding up the 15 percent in Federal Insurance Contributions Act (FICA) taxes businesses pay to cover Medicare and Social Security costs, and the average 20 percent due in state and federal income taxes.

“If you have a dollar of income and you’re not offsetting it with a dollar of expense, the government will tax it at your effective tax rate,” said Fende, who added there are ways small businesses and self-employed individuals can mitigate this crunch.

Like we do with our children, Fende said offering a reward, or treat, is a good way to get employees to do something they don’t want to do, like filing boring expense reports.

For self-employed individuals, giving yourself a new book or even just a chocolate after the task is completed can make you “more likely to do it next time you’re required.”

If that doesn’t work the Web is full of free and paid services that small business owners can use to outsource the pain of accounting.

Concur offers subscribers the ability to take pictures of receipts with their iPhone and Android devices and submit them electronically, allowing employees to toss away their paper copies.

“That’s helped us to get rid of a whole lot of filing cabinets,” said Christian Metcalfe, co-founder of Seattle, WA-based data analytics startup Context Relevant, which uses Concur for all its accounting needs.

“In the ‘Moneyball’ example, this helps us keep our money on the field and be more efficient in how we’re running our business.”

Metcalfe, whose company is also paid by Concur to organize its data, said no software will eliminate employee procrastination when it comes to filing expense reports on time, but cloud-based services can offset the incidence of paper claims piling up on accountants desks.

Concur, also based in the Seattle area, estimates that inefficient manual expense filing is costing U.S. firms as much as $2 billion annually in additional processing costs.

That calculation is based on a recent study by the Aberdeen Group that showed it costs the average U.S. company $18 to process each expense report. The study also found that cost drops below $8 per report by automating the process through web-based applications.

Xero, a New Zealand-based accounting software firm with more than 110,000 paying customers, also offers the ability to scan receipts by phone and is attempting to get a foothold in the lucrative U.S. small business market.

Jamie Sutherland, who heads Xero’s U.S. operations, said the ability to “knock off” expense reports on the fly from such exotic locations as a cab or airplane makes the process more enjoyable.

“It makes it a little bit more fun and sexy to do expense management.”

However some small business owners remain reticent to try the new technology, preferring to store receipts in a shoebox and hand it over to an actual accountant.

Howie Statland, 41, who sells vintage guitars at New York-based Rivington Guitars, has an iPhone, but has yet to use it to scan a receipt or submit an expense.

“This is the only way I know how right now.”

Article source :http://uk.reuters.com

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The Spirit of Accounting: Using Private Company GAAP to Serve Statement Users' Needs

Let's now consider whether the U.S. needs two sets of GAAP for public and private companies. If so, we face many questions as to who should establish those standards and what they should look like.

I'm convinced that the most vocal arguments in favor of private company GAAP are primarily gut-level and emotional. However, it is also true that this issue has been debated and that steps have been taken to consider how to implement the basic idea.

As you know, NASBA has been involved with this effort, and former NASBA chairman Billy Atkinson has been appointed chair of the PCC. Another former chair, Diane Rubin, was also appointed after being nominated by your association. I hope that Billy, Diane and NASBA can lead the council to bring long-needed reforms to GAAP.

I encourage you to make the most of your involvement, because it opens up an avenue to do more good than you may have imagined. The risk is that not enough would be done to attack the real problems created by grossly deficient accounting standards.

A NEW PARADIGM

As I understand it, the council's first effort will aim to identify as many places as possible in GAAP that could be changed to be more useful in the private company setting. In my opinion, there is no better place to start. I urge the council to approach this effort from a perspective different from what you may now hold.

Philosophers use the word "paradigm" to describe an accepted worldview. Profound changes usually follow when we go through a "paradigm shift." For an example, just think how life has changed as a result of the iPhone and other means for mobile connectivity.

Specifically, I call on the PCC to stun the accounting world by adopting a users-first paradigm that would lead to assessing the usefulness of today's GAAP for meeting the needs of those who use private company statements, not those who prepare or audit them.

By analogy, it's well established that good things happen when managers focus on their customers' needs, instead of their own concerns. This shift to the consumer's point of view is at the heart of the Total Quality Management revolution that drastically changed the business world some 25 years ago. It can also be at the heart of a new dawn of relevant and useful financial statements.

THE USERS' NEEDS

So, what would that mean for private company reporting?

For one, this area is ripe for a user-oriented paradigm because there is much less distance, and a longstanding personal relationship, between private company statement issuers and users. As a result, effective financial reporting is more than likely to occur in a setting in which trust has already been established. This trust should not be jeopardized by reports that fail to tell the truth, the whole truth, and nothing but the truth.

To build on that point, I suggest that private company financial reports have usefulness in three primary settings.

First, these statements should help actual and potential lenders assess a company's creditworthiness. To do that, users must be provided with clear descriptions of an entity's cash flow. The reports must also reliably describe assets that have been or might be pledged as collateral, and they must usefully describe all existing obligations so the users can fully understand the present debt risk. Therefore, reports should use the direct method to describe operating cash flow and mark all assets and liabilities to market. All off-balance-sheet financing must be eliminated.

Second, private company statements should help owners and potential buyers assess the firm's value so they can conduct informed negotiations for its sale or acquisition. Again, direct-method cash flow information is important. Off-balance-sheet financing must be eliminated, and market-based information about the assets and liabilities is absolutely essential.

Finally, these financial statements will surely prove useful for managers.

Of course, but unfortunately, traditional GAAP statements do not serve these functions. Thus, any effort to merely tweak existing standards won't be good enough. For certain, any efforts to curtail the amount of reported information would be going in exactly the wrong direction.

To put it another way, those who advocated for private company GAAP are looking to reduce preparation costs. To be very clear, the search must be for the most useful statements, not the least expensive statements.

WHAT NEEDS CHANGING?

Here is the main implication for the council and the Financial Accounting Standards Board - and all accountants, for that matter. I am convinced that an objective and thorough evaluation of today's GAAP will reveal that virtually all standards need substantive reform. Superficial modifications will not be good enough. Instead, financial statements must be completely useful.

(I actually drafted the preceding paragraph several weeks ago and was especially pleased to read Billy's comments at the American Institute of CPAs' Council meeting held in October, in which he declared with these words his intent to evaluate all of GAAP: "If we do have fixes, we should first evaluate the fixes from the standpoint of all users, not just private company users.")

If the council does proceed along these lines, they need to ask new questions, such as, "Why are we still doing today what came into common practice before computers existed or when Queen Victoria had just ascended to her throne? Why do managers want to reduce the cost to prepare their statements if cutting those corners will increase their capital costs and diminish their company's perceived value?" My favorite is, "Why are impaired market values below book value considered to be reliable, but those above book value are not?"

These bold questions should lead to bold answers.

AREAS FOR IMPROVEMENT

To hammer home this point, I'm going to list a few places where accounting practices could be improved: the cash balance, cash flow statements, accounts receivable and credit sales, inventory and cost of goods sold, investments in equity and debt securities, property and duh-preciation, intangible assets, financial instruments, consolidated financial statements, off-balance-sheet financing, income tax expense and deferred taxes, accounts payable, long-term debt, convertible debt, defined-benefit pensions, stock-based compensation, shareholders' equity, preferred stock, balance sheet classifications, income measurement and presentation, comprehensive income, and quarterly reporting. Once these are exhausted, I am sure we can find others to fix, like earnings per share.

In other words, GAAP is seriously broken because it has never been developed to address users' needs. Because it is seriously inadequate, it needs to be seriously reformed.

The council has been empowered to kickstart that reform by identifying ways to make private companies' financial statements useful. And, then, as Billy confirmed, it's a natural extension to question public company GAAP as well.

Indeed, I hope that FASB and the PCC can collaborate to produce a new GAAP that can be applied by all companies, private and public. 

AN UNEXPECTED TURN

Putting users first differs from the agenda pushed by those who want an oversimplified GAAP that would be cheap to comply with but fail to provide useful information. If the guiding objective is to help capital markets become more efficient, then users should have a leading role in the standard-setting process for identifying and resolving the issues. Alas, they have been virtually neglected so far.

How do we know that supporters of a separate GAAP weren't putting users first? Evidence is provided by three things.

First is the composition of the Blue Ribbon Panel. More than 70 percent of the panel's 18 members were CPAs, chief financial officers, and other managers. There were only two users, along with two seats for a professor and a regulator. This mix does not reflect a paradigm that puts users' needs first.

Second is the backgrounds of the respondents to requests for comments. Bruce Pounder reported in CFO Magazine that 103 responses to the panel's request came from CPA practitioners and state societies, while only four came from users and business owners. The responses to a later request were terribly skewed toward CPAs because thousands of them clicked on a link that authorized the AICPA to send a prefabricated letter to the Financial Accounting Foundation. (While this gambit was legal, Bahnson and I described it as ineffective and illegitimate.)

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