26-06-2002 19:44									#31
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"Worldcom says, with a straight face, that GAAP tells us to capitalize this switching equipment, which GAAP says has a life of 10 years. Reality is that the equipment will be technically obsolete in two years, so it shoud either be expensed or have a 50% depreciation rate."

Sure it's easy in principle, but on that scale ? I still find it a bit puzzling.

"What upset you? Do you think Jack is a complete fake? What was the specific issue?"

After the EC blocked his honeywell takeover he gave the jack Welch memorial lecture on european integration. I hope he knows his genuine business stuff better than that. Or at least knows his limitations.

	26-06-2002 19:46									#32
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About total fake - if I understand you correctly what you mean by that, I'd rather apply that to Immelt. But I know neither enough to judge.

	26-06-2002 19:48									#33
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quote: Originally posted by Adam Smith Not really that hard to do. Worldcom says, with a straight face, that GAAP tells us to capitalize this switching equipment, which GAAP says has a life of 10 years. Reality is that the equipment will be technically obsolete in two years, so it shoud either be expensed or have a 50% depreciation rate. Anderson says that Worldcom never told them about this. But thats exactly the kind of thing an auditor is supposed to check. A friend who works for a telecom told me this morning that this is one of the first things auditors check when they do high-tech companies. Anderson did not even come close to their auditing job. Anybody know if Anderson was earning big bucks in strategy consulting with Worldcom, hence a conflict a la Enron?

Hmmmm. Did they get in trouble for using the same depreciation in their tax accounting as in their regular accounting? Pretty funny if that is the case. Usually people criticize companies for using DIFFERENT rates...not the same one. In most EU countries, you are required to use the same accounting for tax and for statements.

As an aside, PC's used to have a tax depreciation time of 7 years. Maybe a hold over from mainframe days. Of course 2-3 is reasonable. And it would be just as well to treat PC's like a piece of paper.

	26-06-2002 19:55									#34
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quote: Originally posted by Roland "Worldcom says, with a straight face, that GAAP tells us to capitalize this switching equipment, which GAAP says has a life of 10 years. Reality is that the equipment will be technically obsolete in two years, so it shoud either be expensed or have a 50% depreciation rate." Sure it's easy in principle, but on that scale ? I still find it a bit puzzling. "What upset you? Do you think Jack is a complete fake? What was the specific issue?" After the EC blocked his honeywell takeover he gave the jack Welch memorial lecture on european integration. I hope he knows his genuine business stuff better than that. Or at least knows his limitations.

What did he say to set you off?

As I recall, the main issue was wether the EU was protecting competitors or consumers. You differed with AS and I (you defending the EU commission) on that issue, but surely that is a reasonable area for disgreement.

	26-06-2002 20:09									#35
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Welch didn't talk about the decision, but about institutions, regulatory frameworks, relationship to national law etc. That's like me talking about baseball memorabilia.

	26-06-2002 20:11									#36
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And when you talk about the housing bubble, viola.

" Markets got a respite from their lows following the release of a surprisingly strong report on new home sales. New sales rose 8.1 percent in May to an annual rate of 1.03 million; analysts were expecting only a modest rise to 920,000 from a rate of 915,000 the previous month."

	26-06-2002 20:36									#37
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That wasn't an error, it was fraud.

	26-06-2002 20:43									#38
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Welcome, echo.

	26-06-2002 20:47									#39
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I hadn't gotten to that post yet, Roland.

	26-06-2002 20:50									#40
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Attachment: dilbert2002024379621.gif
This has been downloaded 65 time(s).

	26-06-2002 20:51									#41
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Why are you bringing the housing bubble in here?

	26-06-2002 20:54									#42
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quote: Originally posted by GP Why are you bringing the housing bubble in here?

It's all part of the USA crashing down to a Japan style death/recession thing

	26-06-2002 20:54									#43
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quote: Originally posted by Roland Welch didn't talk about the decision, but about institutions, regulatory frameworks, relationship to national law etc. That's like me talking about baseball memorabilia.

but was it in relation to the adverse decision? For instance, that an EU body is more aggressive or adverse becuase it is qausi-independant wrt member nations?

Or was he just 100% talkking about the EU with no relation to the decision?

	26-06-2002 21:00									#44
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"Why are you bringing the housing bubble in here?"

Because it's holding the rest of the US economy together. Including the stock market.

"Or was he just 100% talkking about the EU with no relation to the decision?"

General blah, completely unrelated. Like an old prof hellbent on lecturing even on things he knows nothing about.

	26-06-2002 21:11									#45
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wrt Welch: Ok.

housing: I prefer to disaggregate issues. You always seem to want to glom everything together. We had a bubble thread. Just throwing in a one-off about housing is distracting.

	26-06-2002 21:14									#46
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Edit - Just ignore me.

	26-06-2002 21:17									#47
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aaargh. I missed it. What did you say, finance-weeny? Come play in our sandbox...

	26-06-2002 21:21									#48
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Just amazed at how lax the implimentation of accounting standards appears to be in the US.

	26-06-2002 21:28									#49
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1. I think it is a recurring problem. Many stocks during the "go-go" mid-60's had issues as well.

2. Do you think that there is a definite difference in the amount of adherence to standards in Britian and US or just some high profile news stories? Just curious. Do you all have a US branch? Have you worked over here? Or talked to coleagues who have? (Not being argumentative...just want to pull more insights out of you.)

	26-06-2002 21:39									#50
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I say appearance, as I don't think there is as big a difference as the big stories would suggest. Most accounting standards are similar to International accounting standards anyway, but the US standards appear to be more open to choice in treatment and hence "manipulation".

I don't know enough about American Accounting standards to be more critical.

Do accounts use the "true and fair" overide?

	26-06-2002 21:44									#51
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quote: Originally posted by GP LOL--yes! Where is fooker, so I can abuse him? Silly business journalists.

What's your beef with my clan Atlantian?

(yeah my holidays are over it seems )

	26-06-2002 21:45									#52
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And I achieved that for you!

	26-06-2002 21:46									#53
	Suffering from ads?

By shivering your ass around apparently.

	26-06-2002 21:47									#54
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Nothing like that. I just ratted on you to MtG, told him all about your hairy businesses.

	26-06-2002 21:48									#55
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So does that mean you'll not kill jews from now on? (hairy stinky kraut)

	26-06-2002 21:49									#56
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Hey! I organized the "Free fooker. We will never forget!" campaign. See Dino's thread as well as the Hall of Fame thread.

ummm...I didn't know you were going to catch me beating up on your guild, fooker. Sorry about that. I really respect the economic and finance insights of all business journalists.

* TCO crosses fingers and whistles...

	26-06-2002 21:50									#57
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We should be careful or we get banned again.

Bad enough noone started a "Free Ecth" campaign.

	26-06-2002 21:51									#58
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quote: Originally posted by GP Hey! I organized the "Free fooker. We will never forget!" campaign. See Dino's thread as well as the Hall of Fame thread.

I saw it, thanks

quote: ummm...I didn't know you were going to catch me beating up on your guild, fooker. Sorry about that. I really respect the economic and finance insights of all business journalists. * GP crosses fingers and whistles...

I'm quite adept at beating my own clan down. If you want just ask me to.

	26-06-2002 21:52									#59
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I hope the markets crash.... oooh think of the panic.... think of the wonderful revolution that would take place.

	26-06-2002 21:54									#60
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quote: Originally posted by Sagacious Dolphin I say appearance, as I don't think there is as big a difference as the big stories would suggest. Most accounting standards are similar to International accounting standards anyway, but the US standards appear to be more open to choice in treatment and hence "manipulation". I don't know enough about American Accounting standards to be more critical. Do accounts use the "true and fair" overide?

Thanks, BC. I'm not familiar with "true and fair". I know a little bit about the pitfalls of looking at accounting metrics rather than economic metrics, but I don't have detailed knowledge of accounting.