E-Book Overview
Profits You Can Trust gives managers, directors, lenders, audit partners and analysts a clear framework to demystify global financial reporting in a market fraught with danger. Filled with provocative and enlightening examples, it offers a fresh perspective and clear guidance for everyone involved with financial reporting strategy and communication, as well as specific and easily understood questions that must be asked to avoid accounting landmines that can destroy even the most successful business. The authors begin with an overview of the challenges of financial literacy for business decision-makers operating in both U.S. and global environments, the reasons decision-makers tacitly "conspire" to inflate stated revenues and reduce stated costs, and how "small" lies inevitably lead to bigger ones. Next, using easy-to-understand examples, they discuss six key accounting minefields in detail. These include revenue recognition; provision for uncertain future costs; asset values; risk management and the use of derivatives; related party transactions; and performance benchmarking.Finally, they turn to the key questions and lessons arising from recent financial scandals, including accounting firm conflict of interest; why Generally Accepted Accounting Practices aren't always sufficient; assessing mergers, acquisitions, and restructuring reserves; and the appropriate role of non-financial measurements such as balanced scorecards.
E-Book Content
Profits you can Trust: Spotting & Surviving Accounting Landmines
H. David Sherman S. David Young Harris Collingwood
PEARSON EDUCATION, INC.
Advance praise for Profits You Can Trust— “This book blasts through misleading financials.” Bruce Wasserstein Head of Lazard “Tired of getting snookered on financial accounting issues in your investments? Worried about your ability to exercise adequate financial oversight as a board member? This concise, readable, authoritative book will enable you to spot accounting landmines without earning a CPA. A must-read for all investors and overseers!” Regina E. Herzlinger Nancy R. McPherson Professor of Business Administration Chair, Harvard Business School Current and former director of 12 publicly traded corporations A “financial expert” under the current SEC definition “This comprehensive layman's guide is a must-read for senior management, boards, committees, and their advisors. Writing in largely nontechnical language, the expert authors provide the most concise and complete road map to understanding, preventing, detecting, and remediating accounting and reporting shenanigans that I have read.” C. Russel Hansen, Jr. Former President and CEO, National Association of Corporate Directors Former Senior Partner, Hale & Dorr Founder and Managing Director of The Board Place. “This enjoyable book has valuable insights for board members, analysts, and stock and bond managers. In my three-plus decades of managing money, this is one of the most user-friendly, as well as expert, books I have seen on this subject. We can all make great use of it.” Fred Kobrick Former manager of the State Street Capital Fund One of USA Today's Top 5 funds of the 15-year bull market
“If shady accounting is detectable to outsiders, Profits You Can Trust will show you how to spot it. A must read for every investor who wants to avoid or profit from questionable corporate accounting.” David Hawkins Lovett-Learned Professor of Business Administration, Harvard Business School “This book performs an extremely valuable service for investors by explaining in clear terms the variations on basic tricks that manipulate the figures in business. It will help investors spot red flags early, and belongs on every investor’s book shelf.” Dr. Cynthia J. Smith Ohio State University, and co-author of Inside Arthur Andersen
In an increasingly competitive world, it is qual