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Gold/Mining/Energy : Nuvo Research Inc
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To: Ron Nairn who wrote (12207)3/9/2003 10:59:24 AM
From: PlayTheKing  Read Replies (1) of 14101
 
PART 2 OF 2:

An audit firm that cannot defend its audit is in trouble. This is not a fraud issue. This is a matter of rules interpretation. Schwartz has done DMX and itself a huge disservice, not to mention the shareholders who depend on their audits. GAAP is not clearly black and white.

Rondo, you've hit the nail on the head. GAAP is not clearly black and white. You can always argue either side of an accounting issue persuasively, depending on which side will be most beneficial to you.

And there are significant differences between US & Canada GAAP precedents. I have no idea what rules apply in Europe for private companies that do not have sales.

Canadian GAAP generally follows US GAAP. Any company that wants to list on US exchanges must comply to US GAAP; and most want to be in the US. Every country in the world has their own rules on how to treat certain transactions. The most widely followed rule outside of North America is the International Accounting Standard, or IAS rules.

The accounting profession has been working tirelessly to come up with one universal accounting rule. This is proving to be too difficult since disputes arise as to which standard to adopt on each accounting transaction.

The norm now is to attach a note to indicate what the operating results would have been under the different rules. DMX has a note for US GAAP accounting reconciliation.

The real losers here are the average investors, like you and I, who are likely not going to understand what all these notes mean.

At the end of the day, I believe that investors must look beyond the numbers and assess the integrity of management...in DMX's case, I think we have a winner.

PTK
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