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Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (5456)	1/16/2002 8:03:58 PM
From: IRWIN JAMES FRANKEL	Respond to of 52153

Enron and Accounting My undergraduate degree is in accounting. I took almost all the courses offered and during law school taught accounting at the University. But even then I did not appreciate the very narrow perspective and nature of the results that accounting certified. Accounting cannot serve two masters. The master that it served was the lenders - the bankers. In a world of tangible assets that worked reasonably well. For much of industry the conditions hvae changed radically. Accounting was never "designed" to deliver information for investors. Sure it was used for that but investors were not the master. When I read, "Quest for Value" it broadened my appreciation for accounting. It looks at financials from an investors angle. It is well worth the time it takes to read and that is especially true for accountants since it challenges the foundation principles of accounting that were driven into us. I submit that there are impediments to obtaining satisfactory accounting statements: - We will never agree on the "master" for whom the statements are prepared. - There will always be situations that cannot or will not be understood by the certifying accountants. - There will always be fraud driven by massive greed at the highest levels of corporate governance. - Corporations and society will not accept the cost that would have to be borne to produce solid and comprehensive statements. - The accounting profession will not assume the liability associated with producing the statements. - Peter's idea of disclosing assumptions and producing ranges for "high and low" assumptions would lead when accumulated to unacceptable ranges of what a company earned. The uncertainty that would be displayed would shock many. ij

To: Biomaven who wrote (5456)	1/17/2002 9:09:48 AM
From: tom pope	Read Replies (1) \| Respond to of 52153

Peter, you're the first person, as far as I know, to have pointed out that Enron's commitments to the partnerships were essentially floorless convertibles. Haven't seen it in the press treatment. The idea of footnoting a range of critical assumptions would make analysis of bank income statements more informative, to say the least. Might even be welcomed by some bank managements concerned that the quarterly addition to the loss reserve could lead to law suits if it turns out to be wildly inaccurate.