26-06-2002 21:54									#61
	Support Apolyton or Terrorists Win

World revolution. And that'd eb the Bolshevik Jewish conspiracy one.

	26-06-2002 21:55									#62
	Support Apolyton, pre-order Civilization IV

quote: Originally posted by paiktis22 I'm quite adept at beating my own clan down. If you want just ask me to.

I'll call on you if I need some particularly telling cutting remarks...

	26-06-2002 21:58									#63
	Remove this text

GP, don't you think the accounting principles of GAAP vs IAS have anything to do with this? I've been told quite often that GAAP is based too much on very specific rules that are easily circumvented, while IAS is based on broad principles.

	26-06-2002 22:03									#64
	Get a bigger avatar today!

quote: Originally posted by Colon GP, don't you think the accounting principles of GAAP vs IAS have anything to do with this? I've been told quite often that GAAP is based too much on very specific rules that are easily circumvented, while IAS is based on broad principles.

Cigar to Colon.

And after Worldcom, the EU will definitely focus on IAS.

Some years ago we thought about harmonizing our rules to the american model.

After the new scandal, this will not happen.

	26-06-2002 22:04									#65
	Support Apolyton, buy Galactic Civilizations: Deluxe Edition

and the problem is all those reams that can be found and explored in the american specific auditing rules.

	26-06-2002 22:04									#66
	Tired of ads?

quote: Originally posted by Colon GP, don't you think the accounting principles of GAAP vs IAS have anything to do with this? I've been told quite often that GAAP is based too much on very specific rules that are easily circumvented, while IAS is based on broad principles.

Maybe. I don't know enough to say. Your comparison is news to me. Why I wanted to draw out BC...

	26-06-2002 22:06									#67
	Remove this text

I don't have great texts on this. But chapter 13 of Valuation by Copeland has some comments about the differences in accounting standards. Looking at it now...

	26-06-2002 22:09									#68
	Remove this text

quote: Originally posted by GP I'm not familiar with "true and fair".

Its the central guiding principle pretty much - If accounts do not show the position and performance of company in an unbiased, factually correct and complete manner they are misleading to the users of the accounts.

Regardless of acceptable treatments, a treatment that leads to the "truth and fairness" must be used.

In this case, WorldCom are following (dubiously) acceptable standards - but are not correctly reflecting the company's performance and position. Hence the problems now.

	26-06-2002 22:12									#69
	Browse Apolyton AD-FREE

Called "Treu und Glauben" in German IIRC, there's no real defintion for it though!

The relevant paragraph in the law book just says that deals have to be carried out under that condition

	26-06-2002 22:12									#70
	Inflate your Upload Space

quote: Originally posted by Ecthelion Called "Treu und Glauben" in German IIRC, there's no real defintion for it though!

If you defined it, then it could be circumvented.

	26-06-2002 22:14									#71
	Increase Your PM Length

quote: Originally posted by paiktis22 And after Worldcom, the EU will definitely focus on IAS. Some years ago we thought about harmonizing our rules to the american model. After the new scandal, this will not happen.

All UK listed companies will have to prepare accounts based on the IAS by 2005.

	26-06-2002 22:20									#72
	Increase the size of your Attachments

Yes, but how often will they be posted? Quarterly, Semi Annually, or Annually?

	26-06-2002 22:23									#73
	Enter the AD-FREE zone

quote: Originally posted by Sagacious Dolphin All UK listed companies will have to prepare accounts based on the IAS by 2005.

All EU countries will have to. Its a EU "command!"

	26-06-2002 22:25									#74
	Got spare money?

2 years ago we were going to the american model though...

	26-06-2002 22:27									#75
	Support Apolyton

GP, I think it's pretty much what Dolphin said. GAAP goes too much into details and forgets about principles.

BTW, I know it has been some time ago, but would you mind continuing that discussion we had about offloading assets in the NASDAQ thread? (I know, I didn't reply anymore)

	26-06-2002 22:30									#76
	Support Apolyton, buy GURPS/ Alpha Centauri

pchang:

Annual accounts would be prepared annually.

What point are you making?

	26-06-2002 22:30									#77
	Tired of ads?

Whether GAAP or IAS, the spirit behind the rules is a more open distribution of a public company's financial status. In the US, the SEC requires quarterly reporting. I believe the LSE requires semi-annual reporting. Most other exchanges require only annual reporting. That means that in many cases, the most recent financial report available is nearly 2 years old. That some companies willfully mislead the public is a separate issue. I believe that no matter the standard used, there will always be criminals.

	26-06-2002 22:32									#78
	Browse Apolyton AD-FREE

i think the main difference with regulations based on broad principles is the wider freedom of regulatory bodies to itnerpret the rules.

(aka fewer: the law allowed me to do that" lines from companies)

less law... to have more.. law abindness...

	26-06-2002 22:34									#79
	Support Apolyton, buy Alpha Centauri

If you have a semi-efficient (or better) capital market the accounts and frequency of publication should not impact on the share valuation.

Most of the important (general) information held within accounts should already be available to the public anyway.

	26-06-2002 22:35									#80
	Inflate your Upload Space

BC, I don't have an accounting textbook. Just a workbook. (hard to look stuff up here.) It lists 9 key concepts:

-dual aspect
-money measurement
-entity
-going concern
-cost
-conservatism
-materiality
-realization
-matching

I did not find the phrase "true and fair" but of course such a plattitude has to be litigated anyway, if not defined. (Ecth has a point.)

Anyway, my limited impression of US accounting is not that it is taught as a manipulative game. The 9 concepts above try to give a framework for fairness.

	26-06-2002 22:37									#81
	Support Apolyton, buy Galactic Civilizations

well critics say that the GAAP rules encourage companeis to follow the letter rather than the spirit of the law.

(not that europe is immune to financial scandsls by any means... Lernout & Hauspie Speech products?)

	26-06-2002 22:43									#82
	Support Apolyton, buy Civilization 2

Colon, ok. You had a question about offloading assets (that the management is admitting that they are not the best managers for that asset.)

That is not a dramatic issue. Many managers/consulting firms/B-school professors would phrase it in just this way, "we are not the best manager for this asset." Just because an asset is crappy is no reason ot unload it. Because the market will value it poorly anyway if it is crappy. You have to beleive that the market has some reason for valueing it more than you.

	26-06-2002 22:46									#83
	Support Apolyton, buy Call to Power 2

quote: Originally posted by Sagacious Dolphin If you have a semi-efficient (or better) capital market the accounts and frequency of publication should not impact on the share valuation. Most of the important (general) information held within accounts should already be available to the public anyway.

Valuation has a graph of DCF to market value for different auto companies from all over the world. The correlation is over .9. But P/E, M/B etc. vary widely. Partly becuase of differences in accounting. moving to FCF valuation solves a lot of that problem.

	26-06-2002 22:47									#84
	How and where? Support Apolyton, buy Civilization 2

Outside the US, Canada, and UK, I find it very difficult to get up to date financial statements from companies. The most reliable source has been their annual reports. These usually come out 1 quarter after the end of their fiscal year. I usually can't get them in DB form for another 6 months after that (so I can run analyses, screens, etc.).

	26-06-2002 22:50									#85
	Support Apolyton buy from Amazon

quote: Originally posted by GP Valuation has a graph of DCF to market value for different auto companies from all over the world. The correlation is over .9.

If it wasn't, then the concept that shares are valued at the discounted rate of perpetual dividends is wrong.

	26-06-2002 22:57									#86
	Avatar Enlargement: We've got the solution

quote: Originally posted by GP -dual aspect -money measurement -entity -going concern -cost -conservatism -materiality -realization -matching

Concepts are the same, pretty much, but it is the execution that appears different.

quote: Anyway, my limited impression of US accounting is not that it is taught as a manipulative game. The 9 concepts above try to give a framework for fairness.

All accounting is treated as manipulation . Its just that there's fair play and there's bending the rules.

	26-06-2002 23:00									#87
	Put an end to popups!

My copy of Valuation does not comment on the issue of which accounting system is more subject to fraudulent manipulation. It's also dated 1994...and presumably is based on older research. So European accounting changes in the 90's would not be reflected.

Main point of the chapter 13 article is that the accounting treatments can vary widely, but that cash is cash. For instacne countries vary in how goodwill is treated, how depreciation is treated, consolidation of subsidiaries, etc. etc.

They have examples of D-C reporting a $105 million loss under German rules in 1993 (first 3 q), but that it would have been a $1.19 billion loss under GAAP. Also have an example of Aegon (Dutch) having a 3.8% ROE* under GAAP and a 14% ROE under Dutch rules (not sure what year). However, the calculated free cash flow is the same in both cases. (Meaning you can deconvolute the differences.)


*ROE is a very slippery metric and prone to manipulation anyway...in any system.

	27-06-2002 00:18									#88
	Support Apolyton buy from Amazon

GP: While I can't say I'm really up to snuff on accounting and it's assorted dark rituals and practices, my gut feeling, having worked extensively with accountants to prepare my units reports, is that US GAAP is easier to, eh, affect creatively than European regulations. Mainly this has to do with that "full and fair" policy that the Brits managed to slip into EU law when they joined. It gives the state the power to squash, of course, but it also makes hiding stuff like this much more difficult.

A trade-off, as with most things.

	27-06-2002 12:05									#89
	Tired of ads?

GP

--"My copy of Valuation does not comment on the issue of which accounting system is more subject to fraudulent manipulation."

There are other books, you know

	27-06-2002 12:56									#90
	Support Apolyton, buy GURPS/ Alpha Centauri

quote: Originally posted by Adam Smith 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.

Do you know if it's Cisco equipment?