It was a year that was a far cry from the best of times and I fear that 2008 is shaping up to be… well, a year of challenges of even far greater dimensions.
Things are moving ever so quickly and it seems that we increasingly only learn about events, not as they unfold, but when the “deeds” are done and the crises are “thus behind us.” It is often said: “that it ain’t over until the (horizontally challenged) lady sings.” We are about to be treated to a concert!
You see in very short order the independent external audits of calendar year entities and corporations will be concluded; and the reports will be issued to management, the shareholders, and the general public.
Audited financial statements are really things of beauty. As a forensic accountant, auditor, and writer; I am in awe of how they “fairly present” the activities and status of the smallest of businesses to largest of MEGA corporations for an entire year in a scant 15 to 25 pages.
The general public doesn’t have a clue what all goes into these annual examinations which culminate in the issuance of these reports - with their auditors’ letters, financial statements, and the notes to them. These are so critical and informative to both the public and the workings of our financial, economic, investment, and governmental systems (and society) as a whole. The reports for the events of 2007 will soon be issued and in many cases will become the fodder for the NEWS stories on page one.
The auditors’ report letter represents a formal opinion, qualification, or disclaimer as to the veracity and “material fairness” of the contents and summaries which follow. The opinion letter provides assurance and comfort that data/information included was examined in accordance with Generally Accepted Auditing Standards (GAAS) and presented in accordance with Generally Accepted Accounting Principles (GAAP). These are “terms of arts” and have specific meaning within the vast array of the users of the reporting as well as within the accounting profession itself. Accounting is clearly an “integrity profession” where firm and staff reputations reign paramount.
With all that has happened (and is happening) within the business, financial, and investment world; the release of the 2007 reports will receive more than the usual scrutiny.
- Was the auditors’ opinion letter unqualified – indicating “a clean bill of health?”
- Was it qualified as in “subject to” or except for” - indicating specifically identified problems or issues pending further resolution?
- Was it qualified as to the “going concern” of the entity for another year?
- Or… was it “adversely written” that the financial information SHOULD NOT BE taken at face?
This last option is RARELY issued.
In times of uncertainties and rapidly moving developments, the notes to the financials take on added significance. This is particularly true for pending litigation and other known contingencies. Such are generally covered in separately noted explanations where outcomes are either described as “reasonably possible, probable, or remote.” These projected outcomes are very important as they forewarn the readers/ users about possible impact.
Coming media coverage should prove interesting!
Certain events and industries now find themselves under the microscope of public scrutiny. They make the NEWS and are the fodder in the reporting of it. This is as it should be in a free and open society.
Timely and complete reporting is essential in these times of change and/or looming crisis.
The public has the right to know and the media has the obligation to inform them. TH*NK of the NEWS as coming from all directions - North, East, West, and South… hence, the NEWS!
Fred Cederholm
asklet@rochelle.net
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