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Grumpy Old Accountants 
By Anthony H. Catanach Jr. & J. Edward Ketz  •  610.519.4825  •  814.865.1361

ANTHONY H. CATANACH JR. is an associate professor in the School of Business at Villanova University, as well as the Cary M. Maguire Fellow at the American College Center for Ethics in Financial Services. His professional experience includes five years as an audit manager with KPMG and six years in the financial services industry. Dr. Catanach has received numerous awards for his publication, teaching, and curriculum innovation efforts. He has authored numerous articles on a variety of accounting, finance, and management issues, as well as several business education texts, and is currently co-editor of Advances in Accounting Education: Teaching and Curriculum Innovations.

J. EDWARD KETZ is an associate professor of accounting in the Smeal College of Business at Pennsylvania State University. He has a bachelor’s degree in political science, a master’s degree in accountancy, and a Ph.D., all from Virginia Tech. Professor Ketz has been a member of the Penn State faculty since 1981. He also has taught at the University of Connecticut and the University of Maryland. Professor Ketz has authored and edited 17 books including Hidden Financial Risk (Wiley, 2003) which examines the corporate culture and the institutional setting that engendered recent accounting scandals. Dr. Ketz has been cited in the popular and business press, including The Wall Street Journal, The New York Times, The Washington Post, Business Week, and USA Today. He also has appeared as an accounting commentator on CNN, National Public Radio, and Bloomberg Radio. See his previous SmartPros column The Accounting Cycle.

Note: As of May 2011, additional Grumpy Old Accountants content may be found on their university blog.

Articles by the Grumpy Old Accountants

 Facebook Get an 'A' in Financial Reporting
Facebook’s financial disclosures as reported in its recent S-1 filing should be anointed the “gold standard” for internet companies planning initial public offerings (IPOs).

Visa's Litigation Escrow Fund
Visa recently set aside some cash to fund future litigation payouts. This is an interesting announcement because it may portend the booking of some litigation losses not already recognized by the firm. (Jan. 2012)
If principles-based accounting is superior to rules-based accounting, as professed by so many in the profession, then this proposition ought to apply to other areas as well, including accounting ethics. (Dec. 2011)
Enron's 10th Anniversary: Context for Andersen's Auditing Failures
We already have discussed the context for Enron's crimes by describing the Roaring Nineties as a period of accounting exaggeration and worse. We then referenced the first SEC filing that confessed some of the crimes by Enron's managers. In this and the next essay, we turn our attention to the auditor Arthur Andersen; specifically, we note the context for underauditing during the 1990s in this essay and, in the next, we discuss some specific issues with Andersen's audits. (Nov. 2011)
As the Public Company Accounting Oversight Board considers changes to the audit reporting model, we must ask: is the report really the problem, or is it the audit behind that report. (Oct. 2011)
Social Security is a Ponzi Scheme
Rick Perry made news a few weeks ago by calling social security a Ponzi scheme.  This proposition has been under the microscope ever since and has generated a seemingly unending amount of heat.  Actually, we should call it entropy because most of the heat is dysfunctional. (Oct. 2011)
Is Groupon "Cooking Its Books?"
Our recent commentaries on the state of Groupon’s financial reporting have been greeted by many investors and journalists with disbelief, particularly our concerns about revenue recognition improprieties.  Moreover, why should anyone lend much credence to the ravings of a couple of “grumpy old accountants?”  Historical perspective is why!  Our advancing years have yet to erase our memories of past financial reporting tragedies, and the detective frameworks and tools that evolved from them.  And, not surprisingly, several of these “techniques” suggest that Groupon may indeed be cooking its books! (Sept. 2011)
An entire generation has seen their dream of retirement shattered by the failure of the accounting profession.  CPAs are supposed to be the “watchdogs” and “gatekeepers” that make sure company financial statements are what they say they are.  Instead, the past 15 years have dealt us a “dot-com” crisis, the 2002 financial reporting frauds (with Enron, WorldCom, Adelphia, Tyco, Computer Associates, etc.), and now the 2008 banking debacle, all aided and abetted by the failure of the accountants to do their jobs.  These three crises have collectively wiped out the savings and retirement funds of the baby boomer generation, and accountants share a major part of the blame. (August 2011)
Groupon: Comedy or Drama?
How seriously are we to take the IPO of Groupon, Inc.?  We shall permit others the fun of debating the merits of the business plan put forward by Groupon’s managers.  We have serious concerns whether the concept of daily, local couponing makes sense strategically, but as our expertise rests in accounting and finance, let’s take a close look at the entity’s S-1 filing with the SEC, where there is plenty to digest.  As we do so, we shall laugh and cry together. (July 2011)

Credit Rating Agencies: Useless to Investors
An old metaphor features a soldier who watches a raging battle from afar and, when the skirmish is over, proceeds to bayonet the wounded.  Credit rating agencies are like this proverbial soldier; whatever information they proffer generally comes much too late to benefit anybody.  They may send out red flags, but these signals often come after the surrender. (June 2011)
Blinder Supports Creative Accounting
Alan Blinder formerly served as vice chairman of the Federal Reserve; he also is a professor of Economics and Public Policy at Princeton University.  Unfortunately, Professor Blinder proves that these achievements do not imply that he advocates or practices ethics in real life. (May 2011)

Where Are the Accounting Profession's Leaders?
Recently, the Investor Advisory Group (IAG) of the Public Company Accounting Oversight Board (PCAOB) noted two diametrically opposed viewpoints that prompted us to wonder where the accounting profession's leadership has gone. (March 2011) 
What's Up with Cash Balances?
The past decade has yielded a growing number of cases of cash reporting problems among global firms. According to Audit Analytics, corporate restatements in the United States for cash-related reporting soared from 0.49 percent of all restatements in 2001 to over 13 percent in 2008. (March 2011)
From time to time, it is good to stop and assess one's progress in life. Such an evaluation helps people to figure out how they are doing and to make strategic decisions to take advantage of upcoming opportunities and to meet future challenges. When we do this for the accounting profession, we shake our heads because accounting shenanigans remain abundant and the seeds for further scandals are sown, watered, and fertilized. (Feb. 2011)

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