I was making a joke. But one that has a lot of truth in it.
The unvarnished truth is:
Accounting for asset valuation, and its impact on performance metrics, earnings and equity is dang complex. Especially when you get into distressed asset valuation. Then throw in whatever regulatory dictates, if any, might apply,.
There’s some skeezy stuff happening in every single publicly traded company. Most of it is small and on the margins, nudging judgment calls a basis point or two to make budget, analyst guidance, or incentive goals. Occasionally it gets big. Very occasionally, it rises to the level of fraud — too often taking place over multiple years, and audited by international-level accounting firms.
We all know about the Butcher brothers, Enron, WorldCom, HealthSouth, Signature Bank, et. al., accounting for CMOs, and accounting for securities.
Most people don’t know that the accounting for loans depends largely on who owns the loan. If it’s a regulated bank, one set of rules applies. If it’s a non-bank (whether they originated the loan themselves or bought it from a regulated institution), a wholly different set of rules applies.
Point being you can be entirely within GAAP (Generally Accepted Accounting Principles) and, depending on a laundry list of internal and external factors and judgment calls, have a range of perfectly justifiable presentations.
For anybody who thinks that 100% of the accounting for any public company would pass the smell test, I have a bridge in Brooklyn that I need to unload. Cheap…you know, for tax purposes.
I’m sorry for hijacking the thread. Let’s get back to recruiting. If anybody wants to talk about how statistics and accounting can be shaded to tell whatever story the teller wants, let’s start a new thread over on Non-Sports.