A creative look into accounting's crystal ball

[winner69]

Gaynor's column this week
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11120853

A subject always close to my heart

He is right and so is the analyst manager mentioned

And the Shareholders Association guy is quoted "We have a massive housing bubble, the benchmark sharemarket index has doubled over the past three years, companies are borrowing to pay dividends and chief executives are receiving huge bonuses based on adjusted earnings," ..... an echo from the past .... we know this will end up ...... but maybe not because this time because this is different eh

Interesting that 181 out of 217 embellished their results .... good eh .... and most believe them

Been some comment on several threads about this in the past .... any others with thoughts

[Snow Leopard]

Your link is a follow on moan from last week's piece (http://www.nzherald.co.nz/brian-gaynor/news/article.cfm?a_id=14&objectid=11117147). Perhaps Brian feels strongly about this.

It is useful if you can read and understand the actual accounts and ignore the spin from directors, pr departments, fund managers, journalists and forum posters.

Best Wishes
Paper Tiger

[percy]

Company accounts are a snap shot of a business.They are historical.As an investor you must be able to understand them,and be able to forward project what the next year's accounts[and following years'] will look like.Today's PE and yield may not give a "true" picture of the company's future earnings,or prospects.To those of us who spend the time and effort fully understanding a business,including its accounts and projections, the rewards are worth it.
I am sure Brian Gaynor and his team spend the time doing their research.
In fact the jigger pokery accounts would most probably work to their advantage.

[zigzag]

On a more personal level, it is like having one set of accounts for the IRD, and another for the bank manager, especially if you are trying to qualify for a mortgage.

[blackcap]

You actually do need a seperate set of accounts for the IRD. Tax accounts and accounting accounts do vary. Most businesses have 2 sets of accounts. The IRD tax laws are different to IFRS as each country has their own tax regime but IFRS is standard across borders. Or is supposed to be.
That said methinks that too many companies try and "massage" their accounts or at least try and portray a picture that is rosier than actual if that suits their purposes. Likewise if they want the price to fall (ie management buyout) they will paint a worse picture. (All within the framework and auditors tick off course)

[CJ]

On a more personal level, it is like having one set of accounts for the IRD, and another for the bank manager, especially if you are trying to qualify for a mortgage.the accounts will always follow IFRS. It's only the puff piece at the front that they can alter. Learn to read past the PR, then you can make your own adjustments.

[CJ]

There is new law reguarding financial reporting and basically you can do what ever you want unless specified by law.really? More detail please.

[CJ]

You actually do need a seperate set of accounts for the IRD. Tax will always start with the IFRS accounts. Then a series of adjustments will be made where the tax Act doesn't allow you to follow accounting treatment (eg. Depreciation, timing of accruals, entertainment etc)

[blackcap]

Tax will always start with the IFRS accounts. Then a series of adjustments will be made where the tax Act doesn't allow you to follow accounting treatment (eg. Depreciation, timing of accruals, entertainment etc)

To a point CJ. My own accounts do not comply with IFRS but the IRD is happy with them. Then again I am not a listed stock or a company that needs to report according to IFRS. Many small to med buisinesses in NZ do not follow IFRS and also do not audit. But I believe you are referring to listed entities?

[troyvdh]

Im not complaining at all but it has to be said that folk who have largely focused on residential housing as an investment have done very well....because if you have not done so for the past 3 decades then you are a twit.Ok Ok there have been some sorry tales..get over it...sure some folk have had bad experiences....with agents/ various investment vehicles blah blah....but lets be honest...if someone had bought an average house ...say next door..10 20 years ago...and .treated the tenants like customers...blah blah...for the past few decades...what has been the return....like I mean it aint rocket science....I aint that smart but hey....


bye the way...Mongolia is big and empty...the train trip to Moscow is flat and boring..Lake Baikail is big...and Moscow is ...well full of the most spectacular women....that well...also I have never seen so many Range Rover (sport)..Bentlys...BMW...Audies...Lexus..in my life...well perhaps there are slightly more in London...and clean you have no idea....as an aside I was there 30 years ago..last month.

[CJ]

To a point CJ. My own accounts do not comply with IFRS but the IRD is happy with them. i was referring to listed co's but could have been all inclusive and said GAAP.

IRD will review the accounts and ask for more detail on high risk areas(GST on non deductible entertainment is a biggie if hey can't find anything worthwhile). And let's face it, the easiest way to avoid tax on an item is to leave it out of your accounts - cash job anyone?

[janner]

i was referring to listed co's but could have been all inclusive and said GAAP.

IRD will review the accounts and ask for more detail on high risk areas(GST on non deductible entertainment is a biggie if hey can't find anything worthwhile). And let's face it, the easiest way to avoid tax on an item is to leave it out of your accounts - cash job anyone?

Also in this weeks Herald.. " The Electronic Wallet ".. " Cash jobs any one " ??..

My Tax on Expenditure is getting closer.. :-))

[percy]

sorry i should have

Accountants dont want you to know how much! you can get away with.

And you can get away with an aweful lot if you file with a tax agent

after all the tax agent wants you to file with them and so they will give you everything they think they can

Also always have you tax agent located in a sunny sea side city away from where you live

At least 150 to 300 Kilometers is good..... you grow to love visiting your accountant on those sunny sunny days ....

Fantastic advice.! lol