Over the past few months, a lot has been said about the future of Social Security. And most of it is not very pleasant. Most of us are wondering whether we will be able to reap the benefits of our Social Security in our old age.
Reading an article recently I found some interesting information about Social Security, the present state and the future. Presently Social Security is taking in more money that it needs to pay the beneficiaries. This surplus is being delivered to the U.S. Department of Treasury, which in exchange gives the Social Security Administration an IOU in the form of special non negotiable bonds (at present there are $1.9 trillion worth of these bonds with the Dept of Treasury). So when the tax revenues going into the Social Security system start to fall short, the SS Administration will start cashing in the IOUs. The Treasury has already spent that money, so when the SS starts cashing in the IOUs, the Treasury will have to look for ways to raise the money- hike taxes, reduce spending on things like education, infrastructure.
Even though we will be able to reap the benefits of Social Security, we will be paying more taxes and getting worse services (education and infrastructure being a few).
But the Social Security system will be in trouble once the IOUs are redeemed. The system will then have a deficit and will have to reduce the benefits or increase the payroll taxes.
One solution to the problem as suggested in the article was to change the way the benefits are calculated. Instead of raising the benefits at the rate at which the wages are increasing, i.e 1-1.5% higher than the cost of living indexes, they should be raised by the increase in cost of living. This would always give you the same purchasing power. It will reduce the burden on the system and help get the system back on its feet.
Till a solution is put into place we can all hope that some day we will be able to reap the benefits of the Social Security tax we pay today.
June 9th, 2007
The inflation rate for women is higher than that for men. The Consumer Price Index for products catering to women (jewellery, clothing, shoes, cosmetics, household appliances) is higher than for products targeting men. Year over year inflation rate in the US, for products catering to women is 18 times higher than the 0.8% for products for men.
The reason for the disparity is the higher demand for women’s products, which in turn is pushing the prices. Women have a higher rate of employment growth than men, more are living single- single women spend more on themselves than men, so there is more being spent on women’s jewellery and clothing thereby pushing the prices and finally leading to a higher inflation rate for women.
March 12th, 2007
In the year 2005, Exxon Mobile reported annual income of $36B, becoming the top earner in the history of the American corporate world. Well they did it again, the annual income of Exxon Mobil for 2006 was $36.5B. The 4th quarter results were lower than expected by 4%, but the record annual profit made up for the lower than expected last quarter.
With this the company has widened its lead over Walmart as the company with the largest revenues in the USA. Oil is definitely the gold of this century, and perhaps the next too.
February 1st, 2007
XBRL Taxonomies,are the dictionaries which the language uses. Each item of data are identified by a specific tag, taxonomies are the categorization schemes that define these tags.
Based on the accounting regulations these taxonomies might change. So different countries have their own taxonomies, within the US different national jurisdictions may have different taxonomies, different industries will have different taxonomies. There are also taxonomies for internal reporting purposes called the GL taxonomy.
January 31st, 2007
Under XBRL every financial data has its identifying tag, which is computer readable. SO instead of having data as text, it is stored as a tag. Computer can read it, store it, analyze it, and present it in different forms. It will make not just intra company analysis easy, but facilitate inter company analysis. This is how: if the tag for Net Income is same for all companies, as is the case in XBRL, then the computer can generate a report analyzing the Net Income tag for one company against its competitors, other companies in different industries, suppliers, buyers, etc…It can compare data of not just national players but also international players.
The tags provide a range of information about the item, such as whether it is a monetary item, percentage or fraction. XBRL allows labels in any language to be applied to items, as well as accounting references or other subsidiary information.
XBRL can show how items are related to one another. It can thus represent how they are calculated. It can also identify whether they fall into particular groupings for organizational or presentational purposes. XBRL is easily extensible, so companies and other organizations can adapt it to meet a variety of special requirements.
January 28th, 2007
An international non-profit consortium of approximately 450 major companies, organizations, and government agencies is working on XBRL. It is an open standard, free of license fees.
January 28th, 2007
eXtensible Business Reporting Language, is a language to communicate the financial data of an organization. It is a process of creating a standard platform/format for reporting. XBRL is a member of the family of languages based on XML, or Extensible Markup Language, which is a standard for the electronic exchange of data between businesses and on the internet.
January 28th, 2007
Now that we have stopped replying to those phishy emails from someone potraying to be our banks, well here comes vishing. Its a new form of security threat we need to safeguard ourselves against. This time around its not about clicking on a link its about calling a number.
You get a call telling you that your credit card has been breached and asks you to call the “following number” immediately. The following number in this case is a VOIP phone that can recognize telephone keystrokes. So once you call the number, you will be asked to verify your account information and key your 16 digit account number. And then, well you know whats next, you get a $1500 charge for a day at the spa!
January 16th, 2007
I just read this article in cfo.com about how the Big 4 accounting firms were reinterpreting the cash flow standard without oversight. The lack of clarity in Financial Accounting Standard No. 95, Statement of Cash Flows, has allowed the Big Four accounting firms, “with no regulatory authority, oversight, or due process,” to unilaterally reinterpret the standard, creating confusion and requiring companies to modify or restate financial statements.
In February 2005 when PricewaterhouseCoopers changed the accounting treatment for Auction Rate Securities (ARS) without any due process and without the opportunity for feedback on the possible impact of the change. The other three major accounting firms followed suit.A broad range of companies were required by their external auditor to modify current financial statements and to restate prior financial statements.
Then in March 2006, PwC again issued a document “applying the same narrow logic” they used on ARS to Variable Rate Demand Notes (VRDN). “The accountant’s advisory said that VRDN no longer qualified as a cash equivalent on the balance sheet even though these investment vehicles did not change in character and were always considered as a cash equivalent based on generally accepted principles. In both cases the other 3 firms took the same action at the same time.
So does this mean that the FASB( for non accounting background people FASB stands for Financial Accounting Standarard Board) ;the accounting standard setting board as we know of, is being replaced by the Big 4. If these accounting firms become the standard setters, the standards will be set to benefit these firms. If that happens there will be another period of accounting frauds and we will need another SOX.
This brings me to another question, how can accounting firms change the interpretations of the GAAP. Shouldnt there be any action against these firms? Who is stopping these firms from doing the same for other principles? So now do we have to relearn the principles?
January 16th, 2007
With greater regulation in the accounting industry and a higher number of services of accounting firms being used by companies, the accounting industry is seeing a higher growth rate. The CCH’s Public Accounting Report, a biweekly newsletter for accounting professionals, released its findings and its Top 100 list on Aug. 31. According to the report, the majority of the accounting companies reported a growth rate of 16.5% compared to 9.1% in 2005. The rate is the highest for these companies since 2000.
Sarbanes Oxley led to the demise of one public accounting firm, but the survivors are now reaping the benefits of higher regulations. Changes in the accounting rules, recent one being change in recording of stock options as an expense, companies relying on public accounting firms for not just audit, but also other consultancy services has brought about a higher growth rate for accounting firms.
January 16th, 2007
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