Tuesday, October 7, 2008

Needed: mandatory CPE in (1) technical expertise, and (2) responsible decision making!

Some readers are probably aware that as I have shifted some of my focus from discussions about hard technical accounting, auditing and legal issues, to situational and governance discussions analyzing the issue: "how could this have happened?", I have come upon the belief that a significant amount of misfeasance and malfeasance is caused not only by a lack of technical understanding and expertise, but also by the failure of the person to act “responsibly” during the decision making process. To act “responsibly,” or “responsible decision making” in this context means that the person understands his or her duties and responsibilities (and to whom those duties and responsibilities are owed), and then goes about satisfying those duties and responsibilities in good faith to the best of his or her ability through diligent issue spotting, inquiry, investigation, analysis and decision making without self- or conflict of interest.

As I read the news, SEC cases and other materials, there seems to be a significant lack of “responsible” decision making. Now, I do not believe that mandatory CPE will necessarily cure that problem outright, but I do believe that it would help focus attention on the issue, and prompt or help guide many basically honest people to actively advocate for and act in a more responsible manner by using prudent decision making procedures. So . . . I do suggest that a reasonable, not overly burdensome amount of CPE should be mandatory in two broad primary areas for people in certain professions or positions. Those two broad areas are: (1) technical knowledge needed to perform the person’s job or function; and (2) responsible decision making, as discussed above, which would include in-class examples and discussions. How about 16 hours of mandatory annual CPE for officers and directors of public companies, for officers and directors of nonprofit organizations (or at least for officers and directors of nonprofits that exceed a certain threshold amount of annual revenue), and for our federal and state elected representatives in the Legislature? A minimum of 8 hours of annual in-person classroom time in each of the two above-mentioned broad topic areas (technical knowledge; and responsible decision making).

Dave Tate

Saturday, October 4, 2008

Link to a discussion about the new Form 990

The following is a link to a short discussion about the new Form 990 for nonprofit tax reporting entities.


Friday, October 3, 2008

N.Y Times article, '04 SEC rule change allowed investment banks to leverage

Here is one interesting article discussing a 2004 SEC rule change that allowed investment banks to take on considerably more investment debt, in part becoming a contributing factor in the current financial fiasco: