Soapbox warning. As a retired CPA who performed many accounting fraud investigations and led the group at a Big 4 that counseled auditors on how to detect financial statement fraud, I find myself damn near apoplectic at the current state of accounting in AI related names. The only thing worse than breaking the rules is nominally following the rules while achieving the same ends as breaking them. If Enron should have taught us anything, it is look at the substance over the form.
Alas, that takes auditors with significant understanding of finance and not those simply equipped with a flowchart of arbitrary rules. You also have to have an auditor with a spine who will stand up and say, “I know this technically meets the stated criteria, but it violates the spirit of the guidance.” Taking such a stand will likely cost you a client and audit firms from the Big 6 are suffering financially, so they don’t have the backbone.
Doug Kass is a world-renowned hedge fund manager with decades of experience and success navigating through some of the most turbulent periods in market history. He is known for his time-tested analytical skills and ability to look past the current noise and herd mentality.
On TheStreet Pro, Kass provides frequent market commentary and investing ideas for active investors throughout each trading day in Doug’s Daily Diary. He also serves as president of Seabreeze Partners Management Inc. Previously, he served as a senior manager at Omega Advisors, a $6 billion investment partnership. He co-authored a book with Ralph Nader and the Center for the Study of Responsive Law called “Citibank: The Ralph Nader Report” and can be found as a guest host on CNBC's "Squawk Box."
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