R. Young is right on point that the conservative
standards of reporting have brought the valuation
issue to immediate attention. That is what
reconciles both Paul B.W. Miller’s (conservative)
fair value accounting of the balance sheet to Eugene
H. Flegm’s historical (and inclusive) income
statement. The difference, “unrecognized losses”
after income from operations, maintains the
integrity of both the income statement and the
balance sheet. Some competence on the part of the
user is necessary to understand this; it simply
cannot be “dumbed down” any further.
the real issue is brought out quite clearly by
Kenneth F. Fick (“Securitized
Profits,” page 54) in his final paragraph: FASB
will likely “address the removal” of
“special-purpose entities.” Enron immediately comes
to mind. “Special-purpose entities” are forms to
move substance off the balance sheet. SPEs are
subsidiaries or related parties which must be
included and reported on the balance sheet in the
classical manner. When do we learn?
you again for a superb issue, and I look forward to
more of the same.
The IRS’s 2016 Data Book, a “hot job” of particular interest at this time of year, and insight into how executive and audit committees view the insights from financial statement audits received attention recently. See how much you know with this short quiz.