History indicates that smaller reporting companies, development and exploration stage entities, and any other small business with little capital rely heavily on meeting their obligations, of all varieties, via the issuance of common stock .
Reviews of 100’s of public company filings and contractual agreements reveals the interpretation of agreement terms and GAAP application may not always seem to be consistent with the economic substance of an individual transaction.
Consider the following example:
The PCAOB recently issued its report on inspections of smaller audit firms from 2007-2010. In addition to citing some statistical information, the PCAOB identified some specific areas of audit deficiencies.
While the PCAOB only provides oversight of audit firms, the SEC’s Corporation Finance staff frequently issues comments in the same areas, often resulting in costly restatements.
In addition to the high level overview of some of the issues identified in the PCAOB’s report as noted below, future posts will provide a more in-depth discussion of the issues, samples of actual comments, and an intro into the approaches that we have previously used in getting the items resolved.
The primary deficiencies that could impact issuers are as follows:
Ingenium Accounting Associates, a PCAOB and CPAB (Canada) registered accounting Firm, is pleased to announce its new blog, known as “Closing the GAAP.”