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Technology Stocks : All About Sun Microsystems -- Ignore unavailable to you. Want to Upgrade?

To: QwikSand who wrote (35144)	9/10/2000 6:14:12 AM
From: JDN	Read Replies (1) \| Respond to of 64865

Dear QS: No, I dont get Barrons, and am not a subscriber so they wouldnt let me follow the link. PM it if you like, but I will tell you right now without even reading it its all BS. In the USA accounting is absolutely governed by the Principles of the AICPA and APB (American Institute of CPA's and Accounting Principles Bulletins)plus the FASB (Financial Accounting Standards Bulletins). This whole thing is STRONGLY REGULATED by the SEC. There is NOT A CPA FIRM IN AMERICA that would even THINK about violating those standards. Now, I will tell you there OBVIOUSLY must be different acceptible accounting methods for a SOFTWARE COMPANY than for a GROCERY STORE. To attempt to compare the two is ridiculous. So, to that extent sometimes you see principles that appear to differ but if you look WITHIN THE SAME INDUSTRY they will not. When I was YOUNG often we did have choices even within the Industry and many people felt that was the way to go as special situations often arise HOWEVER, the powers to be didnt like that so for years now every effort has been made to STANDARDIZE accounting principles WITHIN THE GIVEN INDUSTRY. My Specialty for many years was SEC reporting. I have spent much time in my past arguing with the SEC as to correct reporting and I even contributed to the Opinion on "Audits of Banks" long ago. I dont know who the author is of that article, but I suspect I have FORGOTTEN more then he will ever know about SEC reporting. Barrons is becoming IMHO a piece of junk for authoratative reporting on anything. JDN

To: QwikSand who wrote (35144)	9/10/2000 6:49:05 AM
From: JDN	Read Replies (1) \| Respond to of 64865

Dear Qs: Rereading your post I see I overlooked a sentence the first time: GAAP vs. "Pro Forma" numbers. GAAP (Generally Accepted Accounting Principles) vs. Proforma numbers is easiest understood as follows IMHO: Gaap is the REAL NUMBERS based upon what happened. ProForma numbers are those numbers adjusted for events that, while they happened, they are not expected to be reoccurring. Example, I bought a company with a great deal of booked technology and immediately upon acquiring WROTE DOWN that value to the portion of the technology I expected to use. Thats a one time write down. Another example, I bought a company and immediately (to improve efficiency and avoid duplicate positions) eliminated the accounting department and took a writeoff for the costs of eliminating it. That too is considered a one time event. Finally, the most common Proforma situation I believe is this example: I bought a company for cash (Purchase Method Accounting) thus I am ONLY allowed to show PREVIOUS results for the survivor company not including the acquiree as is done in the POOLING CONCEPT. So, on a proforma basis I show what the NEW TOTAL COMPANY would have looked like had the acquisiton occurred at the BEGINNING of the Reported Periods. Now its true, a lot of judgement comes into play here in the above examples, but isnt that the case ALWAYS in anything you do? Example in the first case what technology am I going to utilize? (all of it or just what is the real reason I acquired them) in the second case what positions are duplicates, can they be retrained etc. If it will ease your mind any consider this, FIRST OFF top financial officers of Major Corporations are not crazy crooks, they are well experienced people attempting to portray as accurately as possible events that have occurred. Sure they make mistakes sometimes (accounting can be horribly complicated) and sure they want to slant things as positively as possible HOWEVER THEIR JUDGEMENT must be reviewed by an INDEPENDENT CPA firm. All the large cap companies have INTERNATIONAL CPA firms as auditors. These guys (I was one) will NEVER risk their reputation on a company NOT TO MENTION their deep pockets. AND, in case you are thinking a company can SHOP AROUND for the answer they want to hear--NOPE cant be done. If a CPA FIRM has ANY disagreement with a Company this must be disclosed IN WRITING to the SEC if they are dismissed AND no one can give an opinion on ANYTHING until they are HIRED. Finally, after all of this, the SEC personally reviews EVERY SINGLE LARGE COMPANY FINANCIAL STATEMENT and the CPA is required to highlight for them any accounting treatment subject to potential arguement. So then THEY TOO have to be convinced the RIGHT CHOICE was made. There are EVEN MORE safeguards then I have listed here but its getting too long already. JDN