Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : John Dessauer's Investors World -- Ignore unavailable to you. Want to Upgrade?

To: Gail Morgan who wrote (1455)	7/29/1998 8:48:00 AM
From: Tealby Abbey	Read Replies (1) \| Respond to of 2346

Gail, Yes, when Louis asked JD what he liked now, he mentioned Core Data, Bally Total Fitness, and CD, mentioning that CD was controversial now but he expected a rebound after the formal audit was complete. I noted that Core Data and BFIT are thinly traded stocks, so I didn't pay attention to those recommendations. I don't think CD is part of his official WSW portfolio, so it won't hurt his reputation because Louis only keeps score of the official portfolios. But I bet a lot of his private clients are fuming at him now. Ten point drops do that to clients. Re: the auditors. I find it amusing no Big Six accountant has commented on this case that I am aware. I am no accountant, but that little blurb you get with your favorite stock's annual report says the auditors are supposed to verify, 'on a test basis', what they've been told by the auditees. In my mind, that means the accountant waves his pencil over the books, drops it on a line, and says "prove to me this figure here is accurate". (My company is being ISO audited this week. It does not involve money, but an auditor could pick me out at random from company employees and ask me to demonstrate that my company is telling the truth about certain things, the things being selected at random. I figure a financial audit is pretty much the same thing). I would think the Revenue line would be an important line; maybe not explicitly audited every year but certainly audited often. For the accountant to be duped (rather than slipshod and complacent), the company would have to have engaged in massive fraud because how else to produce bogus receipts, invoices, and all that stuff to back up the revenue figure? Ernst and Young are saying they were duped, but (speaking again as a layman) I'd have to hear another Big Six firm say: "Why Yes, that's quite Plausible, Happens to Us All the Time" before I'd believe it. But whether E&Y were duped or not, it still doesn't speak well for CUC. Time for heads to roll. BTW I too am long SFA having bought in during the October crash. In my mind, SFA is an investment; CD is a trade. Best of luck to all.

To: Gail Morgan who wrote (1455)	7/29/1998 9:30:00 AM
From: DWB	Read Replies (1) \| Respond to of 2346

Just as a reference point, the WSJ carried an article sometime over the last week or so, that pointed out how hard it is to sue the auditors. Legally, it has been argued that auditors work for the board of directors/management, and not the shareholders, therefore, the only people who can take action against them is those same corporate officers (I guess by getting rid of them). In other words, the audit information you get in a quarterly report is just provided out of the good graces of the company, not a binding contract with you as to what has occurred. The audit companies also say that they can't be held to the data's truth, especially if management is willfully falsifying/hiding information. Basically, in that respect, they just check the math, and make sure it's per appropriate accounting standards. If you have access to the online version of the WSJ, you should be able to find the article with a simple search. DWB