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To: sibe who wrote (6170)	5/10/1998 2:36:00 PM
From: Ed Flynn	Respond to of 10786

" Do you see any problem with how Alydaar is doing its accounting? I'm not suggesting anything improper, but perhaps misleading when looking at total revenues, which may include billing for work not yet done." What is it that looks misleading to you? It seems that everyone is confusing the cash flow and revenue recognition issues. Revenue is being recorded under the percentage of completion method (SOP 97-2) page F-7 annual report. On the balance sheet in the current liability section, billings in excess of costs and estimated earnings on contracts in progress are recorded (representing cash payments received but not yet earned). It does appear that revenues are being recorded for work that has not been performed.