Tax Guru-Ker$tetter Letter
Monday, July 29, 2002
What's The Right Number?
As I've explained on several occasions, accounting is much more of an art than the cut & dried science that most people think it is. Even with the new Federal requirement that CEOs sign a statement swearing for the accuracy of their companies' figures, there will still be plenty of room for different assumptions and methods of portraying a business's finances.
Contrary to popular belief, GAAP (generally accepted accounting principles) don't dictate just one way of doing things. They encompass a very wide variety of choices, making the side by side financial comparison of different companies literally impossible to do. This is how it has always been and how it will still be when this new rule kicks in in a few weeks.