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LEADING THE WAY

Law Enforcement Against Drugs, or LEAD, partners with Schools in New Jersey to educate our youths on the dangers of drug use. One of the initiatives of LEAD this year was to invite seven gifted students from Fifth Grade to write an essay, poem, or narrative on the dangers of drug and alcohol (ab)use. A LEAD-jury selected three winners from this competition. Emma Ghosh was awarded the second place in the competition held at Lafayette School District.

The battle with drug addiction has afflicted our society for decades. Our approach to tackling this societal predicament has been from the supply side, i.e., trying to restrict the inflow of drugs from other countries. Nevertheless, it is hard to regulate contraband items when payoffs are high because of the escalating demand for these coveted products. A simpler and more effective solution, which is often ignored in our societies, is to limit the demand by making our youths familiar with the heightened risk from drug (ab)use. We applaud the efforts of these seven fifth graders who are committed to disseminating the dangers of drugs, alcohol and tobacco.   

Name:  Emma Ghosh

Date:  6/9/17

Teacher: Ms. Dellano

Project Chosen:  Essay on the Dangers of Drugs, Alcohol and Tobacco

Doesn’t everyone want to live life to the fullest? Don’t you? I do, my friends do, my classmates do, my family does. Well, the L.E.A.D program teaches kids how to be safe and protect themselves from obstacles that could possibly prevent kids from living a happy and healthy life. The program helps kids learn what drugs, smoking, and alcohol can do to their body and how it can affect the way we treat others and others treat us. The L.E.A.D officers teach us that there is nothing good about taking drugs, alcohol, and/or smoking. There are many morals that L.E.A.D is able to help kids understand, like the difficulties of life when you do start alcohol, drugs, and/or smoke. Three things that I have learned from the L.E.A.D program are that life is supposed to be a journey, exploration, an adventure, when you start drinking alcohol, smoking, and/or do drugs, you physically cannot keep up with the adventure and journey. You wind up hurting those around you, those that love and support you. Secondly, smoking, alcohol, and/or drug usage has deadly effects on your brain and body. Lastly, and most importantly, L.E.A.D taught me strategies on how to say NO to drugs.

First off, life is supposed to be a journey, exploration, an adventure, basically action-packed. When you start drinking alcohol, smoking, and/or use drugs, you physically cannot do even the basic functions. Alcohol, drugs, and smoking make it hard for you to stay active and keep up with all your other friends. Most importantly, you hurt the ones around you and the people that love and support you.

Secondly, smoking, alcohol, and drugs stop your brain from functioning properly. The chemicals in cigarettes are horrible for the brain. The ingredients in cigarettes, alcohol and drugs are in every way, harmful to you body. I can recall that one of the L.E.A.D teachers said, “One of the main effects of alcohol is brain and nervous system damage. Alcohol can be memory-impairing, vision-and-speech-affecting, seizure-causing disorder. You won’t be able to form new memories. You’ll mumble involuntarily and your eyes will twitch constantly.” The brain and heart are 2 of the most important body parts. We would not be able to survive without them, and smoking, drinking, and drugs target you heart and brain, which is one of the reason people die from one of the three.  

Additionally, smoking, especially, can lead to irreversible damage to your lungs and heart. Which can then cause the person to have trouble breathing and put them at a greater risk of heart disease or lung cancer. For example, the L.E.A.D teachers explained, “Smoking, in particular, can give you lung cancer or heart disease because of the smoke that you inhale. The smoke that is inhaled can damage your lungs because of all the chemicals in tobacco, which are also released into the smoke. The chemicals in the smoke are absorbed by your blood cells and then reach your heart and hurt the function of your heart and lungs. That will subsequently make it hard to breath. Smoking can also cause cancer of the lung, esophagus, mouth, throat, kidney, bladder, liver, stomach, and much more.” The L.E.A.D teachers also mention the horrible consequences of using drugs too. From deadly cancer to fatal heart attacks, some prescription drugs have even been known to cause either slow or immediate death. Other drugs may cause patients to do things they wouldn’t ordinarily consider. Drugs can also cause cancer of the bladder and other organs. Drugs can also elevate diabetes symptoms. This all proves that smoking, drinking, and drugs can cause irreversible damage to your body.

Most importantly, L.E.A.D taught me strategies to say no to drugs. One big problem is that some people are really hurting others and making them suffer through peer pressure.  One of the most important factors is that drunk people think smoking, drinking and doing drugs is “cool”, but that is just the chemicals taking over their brain! “Peer pressure will usually stop after the person says no, but in some rare cases it doesn’t. And that is where you want to go to a trusted adult, like a family member or whomever is closest, like if you are at school tell a teacher or aid. This is NOT tattle-tailing! Peer pressuring is wrong and not ok, it should be reported immediately. Even if you see someone being peer pressured who doesn’t know how to say “no” or is being threatened, you could help by telling an adult immediately, or the person being peer pressured could get seriously injured!” stated one of the L.E.A.D teachers.  This shows that although some people may say it’s cool to take drugs, drink or smoke, in reality you would know not to listen to them because you had L.E.A.D classes! This is an extremely important thing to know because if you are clueless when something like that happens to you, you need to stick up for your own health and wellbeing! ‘Cause not everybody else will know what to do during such a situation.

In conclusion, if you’re on drugs, drink, or smoke, life is a bottomless pit that drowns you in sorrow and remorse.  You cannot trust drugs, alcohol, and smoking to help you or heal you or make you forget that horrible past, you have to handle it yourself and learn to deal with it like so many other people in this world have. The L.E.A.D teachers tell us that our mind is still growing then, which is when smoking, drinking, and doing drugs have the ability to take their hardest strike at our brain, heart, lungs and other internal body parts. L.E.A.D is an important program that I feel, everyone should know about. The program is not your average program that tells kids “drinking is bad”, “don’t smoke or do drugs”, it is able to get into more detail and give kids an absolute crystal clear image of how dreadful it is to smoke, drink, or do drugs. In conclusion, I have learned valuable lessons from L.E.A.D. Most importantly, life is supposed to be a journey, exploration, an adventure, and when you start drinking alcohol, smoking, and/or do drugs, you physically cannot keep up with the adventure and journey. You wind up hurting those around you, those that love and support you. I, Emma Ghosh, pledge to never ever try to drink alcohol, use drugs,or smoke.

July 4, 2017

 

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Mardi Gras Float in Trouble: First NBC

mardigrasIn the absence of major national banks in New Orleans, regional banks have floated the NOLA (New Orleans, Louisiana) economy. Through its wholly-owned subsidiary First NBC Bank, First NBC Bank Holding Company provides a wide range of financial services in New Orleans, Florida, and Mississippi Gulf Coast with 39 banking offices.

Following Hurricane Katrina, First NBC invested heavily in New Orleans construction projects that included generous tax credits established by federal and state governments. These investments collectively helped propel First NBC to become the city’s largest bank based on assets under the leadership of CEO Ashton Ryan.

Halloween Scare: Stress Test

The Federal Reserve Bank of Atlanta and the Louisiana Office of Financial Institutions informed First NBC on Oct 11 that the bank is under “troubled condition.”  As troubled bank, it must seek regulatory approval before adding any new directors or senior executives or changing the responsibilities. The bank is also prohibited from increasing its debt, distributing interest on subordinated debt or paying dividends on its stock.

To add to the stress, the Federal Deposit Insurance Corp. (FDIC) recently declared that First NBC is no longer “well capitalized,” restricting its ability to take on certain deposits and pay interest. First NBC was recently downgraded to junk status by Kroll Bond Rating Agency Inc., which specializes in rating smaller lenders. HoldCo Asset Management, which owns the banks’s debt has shorted the bank’s stock and as a way to hedge its risk against a bank default has also publicly questioned the bank’s accounting policies.

Uncle Sam’s Subsidies: Tax Credits

First NBC invested heavily in New Orleans in construction projects following Katrina and thereby benefited from the generous tax credits from federal and state governments. Because the tax credits received by First NBC were more than the taxes being paid, the bank was able to use the unused portion of the tax credits to reduce future tax payments by offsetting future taxes against the unused portion. For instance, if the government gives a $1,000 tax credit to a single parent for raising a child alone, and the parent must pay $800 as federal income taxes based on his/her income, the parent does not pay any taxes for the current period because the tax credit fully offsets the $800 taxes payable for the current year. More importantly, even after the tax offset, the remaining $200 tax credit balance can be used to reduce future taxes.

Accounting rules allow this $200 future tax benefit to be capitalized (i.e., treated as an asset) and booked as a deferred tax benefit. As of the first quarter of 2015, the bank’s deferred tax assets—the benefits from reduction of future taxes—are $247 million, up from $95.8 million a year earlier.

In 2014, the company reported $28.6 million as income before taxes yet it reported a net income of $55.6 million because it had an income tax benefit of $27 million (instead of having an income tax expense which normally reduces net income).

Mardi Gras Float in Trouble: Recanting Previously Issued Statements

First NBC announced in August 2016 that it expects a delay in filing its 2015 Form 10-K (annual report filing with the SEC) because of restatement of previously issued financial results! The prior results included errors because of the following reasons:

  • Use of an inappropriate amortization method in accounting for investments in tax credit (Halloween Hullaballoo)
  • Consolidation of certain investments in Federal Low-Income Housing Tax Credit entities because such entities were determined to be variable interest entities in which the Company was the primary beneficiary (Enron Phantom).
  • The result of the consolidation has adverse effect on the financials (Hurricane)

Following the error corrections, the 2014 net income was now being restated (or reduced) by 20% ($55.6 million being revised to $44.7 million). Similarly, the 2013 net income was being restated (or reduced) by 18% ($40.9 million being reduced to $33.6 million). Accumulated earnings for 2012 and prior periods was being reduced by 16% from $59.8 million to $50.3 million. The company in its 2015 10-K stated “We determined that we had insufficient qualified personnel at both the executive management and staff levels with appropriate knowledge, experience and training on accounting and reporting matters, which contributed to the material weaknesses that resulted in the restatement, as well as the inability to timely file this report.”

To make matters worse, the bank was in violation of NASDAQ listing rules because it had not filed its 2016 quarterly statements. To avoid delisting from NASDAQ, First NBC submitted a plan to regain compliance with Nasdaq’s listing rules.

In a time-span of less than a year, the stock price of First NBC declined from a high of about $40 to around about $5.30, which is a cyclonic decline of around 86%. More than $600 million in shareholder wealth was destroyed because of the accounting related aggression.  

Grateful Dead Sings Aiko Aiko Ande

Ernst & Young (E&Y), a Big 4 auditor with international reputation and stature, has been the independent auditor of First NBC leading up to the 2015 financial statements. First NBC’s restatement is likely to bring considerable negative publicity, media scrutiny and regulatory intervention for E&Y. It will not be surprising to see class action lawsuits initiated by shareholders to recover losses.

In September 2, 2016, Ernst & Young declined to stand for reappointment as the company’s independent auditor for 2016. Is it a case of too little too late? A restatement is considered an audit failure.

Did E&Y fail the shareholders of First NBC? Only courts and the SEC can render a verdict on this matter. Until then, the accounting profession sings “Aiko Aiko Ande” in Cajun style.

 My spy boy saw you spy boy sittin by the bi-yo

My spy boy told your spy boy, Im gonna set you flag on fi-yo.

I said, hey now, hey now, Aiko aiko all day, jockomo feeno na na nay, jockomo feena nay.

My grandma and your grandma were sitting by the fire

Said my grandma to your grandma, gonna get your tail on fire.

Chatham- Helsinki; October 30, 2016

 

 

 

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Professor Ghosh Nominated for Presidential Excellence Award for Distinguished Teaching

empty-314554_1280Professor Aloke Ghosh is nominated for a Presidential Excellence Award for Distinguished Teaching by the students of Baruch College, The City University of New York. Professor Ghosh teaches the graduate intermediate accounting course, which is frequently viewed as the most challenging course in the MBA and MS programs. 

The winner of the award will be chosen by the Awards Committee. The committee will look at the following factors to pick the winner:

  • teaching philosophy
  • course syllabi
  • course reading lists
  • other course materials
  • current curriculum vitae
  • peer evaluations for the past 4 years
  • student evaluations for the past 4 years

The committee will review all professors who have been nominated and will announce the winner later in the year. Read the full nomination letter.

February 14, 2016; 5.07P

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Polluted Profits, Emission-Gate and Academic Research

Volkswagen-Car-LogoThe power of academic research

In 2013, three faculty members and two graduate students from West Virginia University, who are also affiliated with the University’s Center for Alternative Fuels Engines and Emissions, began working on a research project with the objective of determining the relative performance of European diesel-engine cars sold in the US. The project was funded by International Council on Clean Transportation (ICCT), a nonprofit European research organization.

The researchers selected BMW diesel-engine X5 and two Volkswagen diesel-run cars—Jetta and Passat. One innovation of their research design was that, distinct from the standard emission tests that relied on stationary test-bed tests, the researchers measured pollutants created while the cars were being driven. They discovered a puzzling anomaly. Contrary to the BMW emission test results, which were very similar when driven or stationary in laboratory tests, the two VW cars were emitting far more pollutants when they were being driven. The West Virginia researchers and ICCT forwarded their findings EPA in May 2014.

EPA and emission-gate scandal

This month, the EPA formally charged Volkswagen of intentionally violating U.S. air-pollution rules by installing software on nearly 500,000 U.S.-sold cars to evade government emissions testing, standards and requirements. According to the EPA, Volkswagen deployed sophisticated software algorithms on some cars that detects “when the car is undergoing official emissions testing, and turns full emissions controls on only during the test.” The effectiveness of the cars’ emissions-control devices is “greatly reduced during all normal driving situations.” The Volkswagen software is a “defeat device” as defined by the Clean Air Act, says the EPA.

The accusations concern four Volkswagen diesel cars—Jetta, Beetle, Golf and Passat—and the Audi A3. Eventually, Volkswagen acknowledged that they sold nearly 11 million diesel-engine cars world-wide containing the same emission software tested by the US researchers.

Race to become #1

Five years ago, Martin Winterkorn, then CEO of VW had laid out an aggressive growth plan with the intention of racing to the top of the global auto industry by 2018 surpassing both General Motors and Toyota. By 2013, VW had the third largest global market share behind Toyota and GM. Winterkorn then concluded that “Volkswagen would be the world’s most profitable, fascinating and sustainable automobile manufacturer.” Forbes (April 17, 2013) prophesied, concurring with Winterkorn, that “Volkswagen Would Rule The World.”

Germany politics

In Germany, nearly one in seven people earn their living, directly or indirectly, from auto making. The automotive industry is the most important driver of the German economy. Volkswagen has strong interconnection with government. The company is based in the state of lower Saxony, which owns a 20% stake in the company and has two supervisory board seats. Many high-ranking politicians with tight links to Volkswagen have emerged from lower Saxony including former Chancellor Gerhard Schröder. He sat on the board of Volkswagen in the 1990s.

What are the consequences of the emission-gate scandal?

• Martin Winterkorn resigned as the CEO of Volkswagen AG. However, he could be entitled to severance compensation of up to $66.9 million, depending on how the company calculates his severance pay.
• The company declared that it would record a €6.5 billion ($7.27 billion) charge to earnings.
• Since the scandal broke, the stock price has declined by a whopping 40% (E170 to E107) and the worst might not be over yet. Thus far, shareholders have lost nearly 28 billion euros.
• Based on the stock market reaction, the charge taken by VW may not be sufficient to combat various lawsuits, government sanctions, and penalties.
• Several auto stocks, especially those in Europe, have been adversely affected.
• Some countries are considering a ban on VW cars

The stock market often attaches lofty valuations for companies with unusually high growth or those with large market shares. The emission-gate scandal is a solemn reminder that the stock market is equally brutal in punishing the fallen.

http://www.wsj.com/articles/volkswagen-emissions-problem-exposed-by-routine-university-research-1443023854

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Minority Report: Gender Gap in Public Accounting

transgenderlogoAccording to Wanted Analytics, accounting and auditing jobs have grown by 19% for the first six months of this year, which is reassuring news for those seeking jobs in the financial sector. The American Institute of Certified Public Accountants (AICPA) found that women make up almost half (44%) of the employees in CPA firms. Yet, only 19% of partners and principals in the CPA firms are women (in 1989 it was a meager 1%!).

Why are women so under-represented in the top positions in public accounting firms? One common explanation offered by pundits is that the auditing profession requires unusually long hours, especially during the audit season, and those unwilling to commit to the grueling hours are unable to climb the corporate ladder. Recently, accounting firms have expressed a willingness to change the 24-7 working culture, which is family unfriendly. According to an AICPA report, “The next generation of CPA firm leaders is demanding that firms create a family-friendly environment conducive to a healthy work-life balance.”

Kristen Rampe (Fortune, Sept 18) who owns a consulting firm which provides training and development to accounting firms, has some suggestions for women on how to make it to the top echelons in the accounting profession.
• Improve your communication skills
• Find a sponsor
• Start an affinity group at work
• Socialize with your co-workers

The accounting profession is ranked as one of the oldest professions. Evidence of accounting records and documents can be traced back to the Mesopotamian civilization, which existed almost 7,000 years ago. The historical longevity of the profession is indicative of its innate ability to innovate and remain relevant over time. Paradoxically, the laws of inertia also suggest that duration plays a role in making the profession more conforming, rigid, and resistant to rapid changes.

As the world becomes more data driven, and industrial revolution gets supplanted by information technology revolution, the accounting profession is bound to embrace greater diversity at the top because the millennials, and not by the old guards, control access to the drivers of information technology.

http://fortune.com/2015/09/12/women-accounting/

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Wall Street Meets Main Street: Turbulence in Boeing

20130421-America-lobying-boeingAccording to the Labor Department, Boeing has the second-largest 401(k) plan in the U.S. with assets around $44 billion. Nine years ago, employees and retirees of Boeing filed a class-action lawsuit against the company for mishandling its 401(k) plan to the detriment of its employees. The plaintiffs accused the company of offering imprudent investment options and allowing fund managers to charge excessive fees.

Class-action Lawsuit: The lawsuit alleges that the actions of Boeing violated ERISA (Employee Retirement Income Security Act), which regulates private pension plans and that Boeing put its own interests ahead of those of its employees. Court documents indicate that Boeing-employees each paid $103 for administrative services in 2005 for their pension plans, when a comparable pension plan should have charged no more than $42. Between 1997 and 2005, Boeing’s pension plan overpaid for record-keeping and administrative services by $35.4 million. The lawsuit also claims that Boeing encouraged some of its bankers to provide services for the pension plan, even though it knew that the bankers were charging excessively high fees, while obtaining various loans and lines of credit from the same bankers.

Boeing strongly denied the claims of the lawsuit all along and was prepared to show, via a trial, that all planned investment options and fees were carefully monitored, prudent and in line with the best practices in the 401(k) industry. However, on August 26, Boeing reversed its prior position and agreed to a preliminary deal to settle this long standing lawsuit. The settlement was made the same day the trial was scheduled to begin. Terms are yet to be disclosed.

Money Exchanging Hands: Effectively, the settlement amount is being borne by Boeing’s shareholders. Over the last 5 days, Boeing stock price has declined from $140 to $130 (as of yesterday) which means shareholders collectively lost about $6.5 billion. The law firm representing the plaintiffs most likely will collect one-third of the settlement amount and the remaining amount would probably get added to the 401(k) plan. The bankers/managers who charged the excessive fees for managing the 401(k) do not bear any cost or penalty nor does the management of Boeing. Money simply exchanged a few hands.

http://www.wsj.com/articles/boeing-settles-lawsuit-accusing-company-of-mishandling-401-k-plan-1440623006

 

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Why Am I Not Getting That Prized Promotion?

Aloke GhoshWe may think that we are stellar performers, that we are a key part of our institution’s team, and therefore always ready for a more senior promotion. Yet acquiring a more senior position can be more daunting than we expect. According to a Survey by USA Today, there are seven potential reasons that could be  holding you back. Click in the link below to read more about the seven reasons.

http://www.usatoday.com/story/money/personalfinance/2015/06/28/how-to-get-promoted-cheat-sheet/29269021/

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Welcome To Aloke (Al) Ghosh’s Blog

Al (Aloke) GhoshWelcomzicklin-school-of-business_416x416e to my weblog, www.alokeghosh.com. Via this personal blog, I am sharing pertinent issues, current topics, and policy matters in the fields of auditing, financial reporting, and corporate finance with relevance for auditors, hedge fund and mutual fund managers, controllers and CFOs of public companies. The targeted audience includes my current and past students, colleagues from academia and practice, and anyone else fascinated by the crossroads of auditing, accounting and finance. Because my academic training and professional experience overlaps these three interconnected business fields, my commentaries/ideas/claims are often a distinctive outcome of a triangular subject-matter lens rather than a specialized subject-matter lens.

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