A special relationship with accounting

[Dinner]

Originally posted by Kidicious

This year the percentage of companies targeted by the SEC spiked to 81 percent; last year less than 25 percent received inquiries.

The increase in inquiries about accounting sounds like the logical response to the recent accounting scandals.

It would be good if everyone could settle on one international standard for book keeping though. In a global economy having global accounting standards should make it easier for investors to quickly understand a company's financial position thus increasing international investment.

[DAVOUT]

Originally posted by Oerdin

It would be good if everyone could settle on one international standard for book keeping though. In a global economy having global accounting standards should make it easier for investors to quickly understand a company's financial position thus increasing international investment.

Global accounting standards would not solve the investor’s difficulty to decide. Until 2008, it was compulsory for European companies listed in the US to make two sets of accounts which was the brutal way to provide perfect information to the investor. Unfortunately it was generally impossible, for non accounting experts, to understand the relevant meaning of the variations between the two sets.
In my opinion, investors have to follow only one very simple advice, the one given freely to all by the greatest investor on earth, Warren Buffet, “invest only in business you understand”.

[Dinner]

I agree that investors should only invest in businesses they understand (that's great advice) but that still leaves a lot of risk from creative accounting or outright accounting fraud.

[Dauphin]

Originally posted by Oerdin
that still leaves a lot of risk from creative accounting or outright accounting fraud.

That keeps me in a job.