Accounting Law Commons^™

The Implications Of Ifrs On The Functioning Of The Securities Antifraud Regime In The United States, Lance J. Phillips

Michigan Law Review

The United States is home to one of the most investor-friendly securities antifraud regimes in the world. Corporate misstatements that form the basis for a cause of action under one of the many antifraud provisions arise in a variety of contexts, an important one being as violations of U.S. generally accepted accounting principles ("GAAP"). For several years, the Securities and Exchange Commission has been considering changing the standardized accounting practice in the United States from GAAP to International Financial Reporting Standards ("IFRS") to promote comparability between global investment opportunities. IFRS is a principles-based system of accounting, while GAAP is rules …

Confidence In The Nonprofit Sector Through Sarbanes-Oxley-Style Reforms, Joseph Mead

Michigan Law Review

Over the past several years, the nonprofit sector suffered a series of highly visible scandals that shook the public's confidence in charitable organizations. Concerned politicians and nonprofit leaders responded with a variety of reforms inspired by the Sarbanes-Oxley Act. The Note focuses on three such reforms: requiring nonprofit officers certify financial statements, mandating audits of nonprofits' financial statements, and imposing independent audit committees on nonprofit boards of directors. This Note argues that, contrary to the conclusions of many commentators, these reforms will provide a net benefit to the nonprofit sector by increasing donor confidence while imposing minimal costs.

Fixing 404, Joseph A. Grundfest, Steven E. Bochner

Michigan Law Review

Although debate persists as to whether the costs of Sarbanes-Oxley's Section 404 regulations exceed their benefits, there is broad consensus that the rules have been inefficiently implemented. Substantive and procedural factors contribute to the rules' inefficiency. From a substantive perspective, the terms "material weakness" and "significant deficiency" are central to the implementing regulations and are easily interpreted to legitimize audits of controls that have only a remote probability of causing an inconsequential effect on the issuer's financial statements. As a quantitative matter the literature suggests that a control with a remote probability of causing an inconsequential effect has an expected …

What's Good For The Goose Is Not Good For The Gander: Sarbanes-Oxley-Style Nonprofit Reforms, Lumen N. Mulligan

Michigan Law Review

In this Article, I contend that the Sarbanes-Oxley-inspired nonprofit reforms currently being put forward in seven states, particularly the costly disclosure requirements, will be of little value in the effort to improve ethical nonprofit board governance. After providing a primer on the oversight of nonprofit organizations and highlighting the unique difficulties facing the nonprofit sector the Article reviews the recent Sarbanes-Oxley-like nonprofit reforms introduced in seven states. It then contends that the disclosure- focused reforms that form the bulwark of these initiatives will not foster improved ethical nonprofit board governance. It also argues that this failure stems from the inappropriate …

Private Standards In Public Law: Copyright, Lawmaking And The Case Of Accounting, Lawrence A. Cunningham

Michigan Law Review

Government increasingly leverages its regulatory function by embodying in law standards that are promulgated and copyrighted by nongovernmental organizations. Departures from such standards expose citizens to criminal, civil, and administrative sanctions, yet private actors generate, control, and limit access to them. Despite governmental ambitions, no one is responsible for evaluating the legitimacy of this approach ex ante and no framework exists to facilitate analysis. This Article contributes an analytical framework and proposes institutional mechanisms to implement it. The lack of a comprehensive framework for evaluating copyright to standards embodied in law is surprising because the range of standards potentially affected …

The Zen Of Corporate Capital Structure Neutrality, Herwig J. Schlunk

Michigan Law Review

It is well understood that corporate capital structure affects tax collections. Most basically, corporate interest expense is deductible. With each interest accrual, the corporate tax base shrinks. Thus, there is a broad range of circumstances in which corporate managers are encouraged by the Internal Revenue Code (the "Code") to load their corporate capital structures with debt. But there is little support for the proposition that Conpress desires corporations to adopt such debt-laden capital structures. Indeed, much tax legislation suggests congressional displeasure with the achievable degree of corporate self- integration. On the other hand, corporate equity has its charms: shareholders are …

Negligent Accounting And The Limits Of Instrumental Tort Reform, John A. Siliciano

Michigan Law Review

This article first explores the relationship between the accountant and the reliant third party, and recounts the mounting judicial hostility to the accountant's traditional privity defense. Next, the article critically examines the arguments that have supported traditional privity-based regimes. The third section turns to the reform courts and tests whether the rationales offered for reform justify abandoning the privity requirement.

Concluding that a convincing case for reform has yet to be made and - given the complexity of a properly executed instrumental analysis - may never be made, the article's final section reconsiders the utility of instrumental reasoning as a …

Accrual Of Gambling Debts Under Internal Revenue Code Section 451, Michigan Law Review

Michigan Law Review

This Note examines whether an accrual-basis taxpayer must include a legally unenforceable claim in taxable income when it is executed or satisfied. Section I of the Note interprets the "all events test" to require measurement of the likelihood of payment of a debt at the time it is executed: If payment is sufficiently certain, the debt must be accrued. The section concludes that the casinos must include the outstanding markers as income in the year of their execution, and cannot postpone their inclusion until the debts are repaid. Section II argues that accrual-method taxpayers are entitled to use a "bad …

Fiflis & Kripke: Accounting For Business Lawyers, Jason L. Honigman

Michigan Law Review

A Review of Accounting for Business Lawyers by Ted J. Fiflis and Homer Kripke

Privileged Communications--Accountants And Accounting--A Critical Analysis Of Accountant-Client Privilege Statutes, Michigan Law Review

Michigan Law Review

This Note will examine the policy bases for the accountant-client privilege and the reception which the privilege has received in federal and state courts. In addition, it will suggest desirable limitations on the scope of the privilege.

The Investigatory Powers Of The Comptroller General Of The United States, Gustave M. Hauser

Michigan Law Review

This article examines the statutory responsibility and authority of the Comptroller General to investigate executive action for the purpose of determining whether the legitimacy of his requests for information may be challenged by the executive branch on statutory as well as on constitutional grounds.

Trusts - The Fiduciary Aspects Of Estate Corporations, John P. Williams S.Ed.

Michigan Law Review

It is the purpose of this comment to examine the existing law with regard to estate corporations, in the hope of providing a guide for persons contemplating contact with them.

Tax Accrual Accounting For Contested Items (Without The Benefit Of I.R.C. Sections 452 And 462), Harrop A. Freeman

Michigan Law Review

A spate of cases in 1956-1957 has required us to examine again the tax handling of accrual accounting in an attempt to find some way through the judicial morass. This study is concerned primarily with proper income and expense accrual reporting in cases in which some form of controversy exists or may exist between the taxpayer and another party concerning the item to be accrued.

Note And Comment, Horace Lafayette Wilgus, Ralph W. Aigler, Harry L. Patton, Frank Ayres, C. Redman Moon

Michigan Law Review

The Right of Joint Adventurers, Holding All the Stock of a corporation, to a Dissolution and Accounting in Equity; Liability of Water Companies for Losses by Fire in Actions of Tort; Judgments as contracts and the Effect of Motive in Creating a Tort; Intervening Agency as an Element in Determining Proximate Cause; Application of Michigan Statute for the Benefit of Laborers and Materialmen on Public Works and the Right of Third Parties to Sue; Marketable Title;