As the old year
winds down to the winter solstice and all those rituals by which we mark the holiday
season, a brief look ahead.

Depending on
reckoning, the New Year will either end an old decade or begin the next one.
Whichever, here are a few events that will feature in 2010 among the on-going
challenges to the global structure of large-company assurance:

• The Supreme Court in the US may well
  declare the PCAOB to have been illegally constituted (here or here). If so,
  predictable spasms of re-enactment and ratification by the SEC cannot
  successfully encompass such issues as the viability of pending
  investigations, the legitimacy of past inspection reports, or the need to
  re-register all the foreign accounting firms.

In
the context of those issues of contention, the legislative mischief to be
wrought by a Congress offered a blank page on which to re-debate the
Sarbanes/Oxley law can scarcely be imagined.

• The fits and starts of accounting
  standards convergence will have no more traction than a pig on roller
  skates. The announced retirement of Sir David Tweedie as head of the IASB
  (here) will take one prickly personality off-stage, but will not solve the
  antagonisms among competing country and industry level interests. And as
  the scope of complexity and judgments within
  both GAAP and IFRS figure to be as significant as those between reporting systems, the
  achievability of comparability and comprehension will remain as elusive as
  ever. 

• Attempts to impose liability on the
  large accounting firms’ international structures will continue apace. The
  success of BDO International in confining the Bankest verdict in Miami to
  the Seidman firm alone (here) means that if that $521 million exposure
  becomes enforceable, BDO may need to find a new US member firm – a tactic
  painful enough for that organization but which none of the Big Four could
  achieve under like conditions.

Flashpoints
for structural threats will include the Madoff-related feeder funds
litigations, concentrated in the US but also spread around the world, and PwC’s
exposure on Satyam.  And with PwC’s
Indian partners on Satyam about to observe their first full year of local imprisonment, that network's attempts to extract itself from class action exposure in the
American court system (here) raise the interesting question whether submission
to Indian justice is really a preferred strategy.

• Tempting as it might be to be lured
  into the speculation about identifying which of the Big Four firm is most likely to
  disintegrate under the combined pressures of litigation and government
  threat, in 2010 or otherwise (here), I will decline – since the
  determining factor is the unpredictable timing of the cases themselves.
  Specify the judges’ scheduled trial dates for the 25 biggest cases hanging
  in Damoclean fashion over the large firms – and only then would I be able
  to offer a view.

• More broadly, strategic decision makers
  in the world of financial information will continue to confront the
  volatility of government conduct – an under-recognized factor in their
  overall risk assessment methodologies.
  

The
reactive nature of public officials has been marked in recent years by an ad hoc cascade of unpredictable and
unintended consequences – ranging in scope and scale from the back-of-envelope
bank bail-out schemes to the bonus supertax in the United Kingdom to the
first-ever invention in Dubai of a default-driven debt reorganization scheme of
uncertain application or reliability.

So life in the
forthcoming year will not be boring. 

Meanwhile, in this space, Re:Balance observes its second birthday.
Launched in January 2008, this venture was the evolution from “Balance Sheet,”
the column I had the six-year privilege and good fortune to write for the
International Herald Tribune.

The challenges have
been fascinating, starting with the anxiety-inducing migration from old-style
print. No less than the accounting firms, the IHT itself — like the other newspapers — pursues its fading
struggle in search of a sustainable niche business model. While in the world of
rapidly mutating media platforms, the near-term impact of the likes of Twitter,
Facebook and Kindle will continue at a dizzying pace to re-define the
information landscape.  

It has been most
gratifying over these two years, both to participate in community with an
expanding group of smart and incisive commentators, and to experience steady
growth in readership and especially in subscribers.

For these
opportunities, I thank you all for your interest, your insights and your
inputs.

Merry Christmas —
best holiday wishes — and a healthy, peaceful and prosperous New Year to all. 

Thanks for joining this dialog. Please share
with friends and colleagues. And if not a subscriber, you are invited to sign
on at the Main page.