Professor Elam

My student in San Antonio, Gerry Herrera, posted a comment asking how GAAP can justify carrying costs forward, ie turning a fixed cost into an asset. I agree.  Actually cash basis accounting prevents managers from pulling such stunts.  The wonder is also how Gillette could do this for years with something as simple as razors and all these ‘analysts’ would not start screaming about it, much less the bank analysts that loaned Gillette money.  We also noted in class that razors stored in a warehouse do not become more valuable leading to inevitable write offs when it finally comes time to move the goods.

Studying accounting can help de mystify such management stunts and starts us on the road to becoming forensic accountants.  Check out becoming a Certified Fraud Examiner  here.  Interestingly CFE is located in Austin, TX.  We had an excellent presentation by  KP MG rep on Internet fraud at the TS CPA Educator Conference I just attended . HM sounds like another post in the making.

DLE