Big Accounting News!

The US is gradually moving away from GAAP towards international standards.

This actually represents a big move away imposing a book full of "rules" (remember, Enron followed the "rules", and look what happened!) toward more comprehensive international standards. This means that accountants will have to inform their clients that just following "rules" does NOT mean that reports comprehensively and fairly depict what has actually transpired in an organization, if such a treatment produces a misleading result.

Seems like common sense to me... but let's see how this is actually implemented in coming years.

VERY interesting!

Digital Gold Currency

Be careful... be VERY careful!

In a report originally intended as intelligence for a law enforcement agency, but made public this week by the Globe and Mail through Access to Information requests, Canada's financial regulator, the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, found Digital Precious Metals Operators "have achieved critical mass on the web."

‘As financial institutions and non-financial businesses increasingly deter money laundering and terrorism financing, adaptable and technology-savvy criminals and terrorist financiers will likely see other unregulated, exploitable avenues to further their nefarious purposes. Digital precious metals may become one of them," FINTRAC warned.

The system works thusly:

1. A user opens an online account with a Digital Precious Metals Operator (DPMO), which are Internet Payment Systems (IPS) providing the user with a digital currency that is allegedly backed by precious metals, which can be used for e-commerce, bill payments, person-to-person payments and other transactions.

2. Most DPMOs often require a username, password and e-mail address to set up a DPM account.

3. Once the account is set up, the user purchases digital currency units via a Digital Currency Exhanger (DCE) to find the user's Digital Precious Metals (DPM) account. DPM accounts are denominated by precious metals weight, rather than cash. The DPM account value fluctuates with the price movements of precious metals.

4. Precious metals e-currencies can be used to purchase goods and services if a merchant will accept them. They can be transferred to another DPM account holder. They can be converted back into national currencies, often paid through wire transfer. And they can be redeemed into physical gold.

"Exploitable weaknesses such as user anonymity and the existence of a network of exchange services-some accepting cash deposits to fund DPM accounts-may facility the placement phase," according to FINTRAC. The anonymity associated with opening the DPM account is maintained through the whole transaction process.

In the layering phase a launderer can ‘cash in' and ‘cash out' his DPM account but does not have to use the same exchange service. Therefore, FINTRAC fears a greater potential exists to "disguise the origin and the destination of funds than with other forms of Internet Payment Systems.

"Moreover, the recent introduction on the market of so called ‘digital gold ATM cards' offers the potential for launderers to re-integrate proceeds into the convention financial system." FINTRAC asserted. The agency fears that the digital gold cards may also allow launderers to "cash out" proceeds, "thereby reintegrating them into the conventional financial system."

Pump and Dump

Trading penny stocks is ALWAYS risky!

Pump and dump schemes involve stocks that have had their price artificially inflated. This can be done by manipulating the market but often it is done by sending out a spam run tricking small investors to cash in on a stock.

The fraudsters then quickly sell the overhyped shares collecting profits for themselves and causing investors and brokerages to lose money.

It has been estimated that 15% of all spam or junk e-mail is made up of messages that "pump" stocks that are later "dumped".

Now, VeriSign has developed anti-fraud software that works by keeping an eye on real-time trading activity.

Simply marvelous!!!!!