Halloween Story

So, I wish I had posted this last Sunday but I was so busy trying to finish this up that I ran out of energy and forgot to blog. Anyway, last week I posted this “slide” to another social media. This “slide” tells a very quick story about a CFO who really did not know what he was doing and so the revenue accounting was being done incorrectly.

You might have to wait for the slide to come up. The first slide should show the text “Scary situation” with an orange-like background of a moon, some large leaves, and 3 birds.

Anyway, happy reading!

At the time, I knew the company was trying to do an IPO so I was pretty certain that it would undergo an audit by one or more Wall Street firms before any attempt to list on the stock exchange. I figured either the company will be forced to redo the accounting or the IPO won’t go through. During that time, I got a sense that something was amiss but I did not know the magnitude of the problems. There may have been other things done not quite right for public listing and I just happened to come upon something I was researching. I was new and trying to learn how the revenue accounting was being done since previously, I had always done the expense side.

The discovery that the revenue accounting was wrong was a rather unpleasant surprise. After years of working in the financial arena, I have come to the conclusion that if you dig deep enough, you will find incorrect accounting, so the issue becomes identifying quickly, keeping those “mistakes” small and quickly correct them. When “mistakes” are being made at the CFO level, they become more serious and can have material impact on the corporation. The company that I was at was a small company so there is not a long career path where the incompetent can be identified before reaching the upper levels. I think larger companies should be able to identify those who really don’t know how to do the basic accounting long before they reach senior levels.

[Right now, I can’t post my blogs in the normal way so I was fortunate to have identified an alternate route to blogging. There was a recent update – WordPress and plug ins – that I’m hoping is the cause of the technical failure. Hopefully, this failure will get corrected in a future update, as has happened in the past. I’m crossing my fingers.]