Fazel again establishes Hollander has 50 yrs experience, has taught comparison of int'l standards to US ones. #Stanfordtrial
Talks about movement toward convergence of US Generally Accepted Acctng Principles w/ Int'l Financial Reporting Standards #Stanfordtrial
Fazel: When did SIB switch to IFRS (re: dispute raised by Warren yesterday)? Hollander: It was 1998. #Stanfordtrial
Says 2005 date stated in report was date of major overhaul of IFRS. #Stanfordtrial
Addressing SIB loans to Stanford. #Stanfordtrial
Fazel: You were talking about "substance over form" re: loans. Is that something you came up with? #Stanfordtrial
Hollander: No, that's embodied in financial reporting and presentation of IASB (acronym for board that sets IFRS). #Stanfordtrial
Fazel: Why do we have existence of substance over form? #Stanfordtrial
Hollander: Need for accountants to look at not just legal form of transaction but economic or business reality of it. #Stanfordtrial
Fazel: What's IFRS definition of "substance over form?" #Stanfordtrial
Hollander: Auditors have to look beyond the numbers to find out what's really going on in an transaction. #Stanfordtrial
Fazel: Why in your opinion is transfer from SIB to Stanford to Stanford companies not a related party loan? #Stanfordtrial
Hollander: Reality of transaction is to invest in the affiliated companies. That’s in essence what financial statements portrayed. #Stanfordtrial
Hollander: Accounting impact of that is that these are investments not loans. #Stanfordtrial
Fazel: IFRS requires you to do that analysis? Hollander: Yes. #Stanfordtrial
Hollander: Such investments should be included in the financial assets of the company in annual report... #Stanfordtrial
Hollander: ...where it was included, not treated as loans. #Stanfordtrial
Fazel questioning Hollander re disagreements between IRS and Stanford re difference between loans and constructive dividends. #Stanfordtrial
Hollander: IRS initially treated money transfers from SIB to Stanford as loan, not taxable. #Stanfordtrial
Hollander: In following year, IRS treated same type of transaction as dividend, taxable income. #Stanfordtrial
Fazel: You've said repeatedly you haven't had opportunity to review audit records. #Stanfordtrial
Fazel: If, hypothetically speaking, they don't exist, is there any way to say annual reports are incorrect? Hollander: No. #Stanfordtrial
Fazel questioning Hollander re: SIB annual report. Asking about what are treated as loans in report. #Stanfordtrial
Fazel asking questions about differences in required reporting under GAAP and under US tax law. #Stanfordtrial
