Political Crossfire Forums

ubikk · Joined: 27 Jul 2006 Posts: 2091

In the UK, corporations are required by law to make public to their shareholders the exact same set of accounting books that is used to assess their taxes. They may not show a different accounting to shareholders.

In the US, most corporations submit one set of books to the IRS, and create a different one to make public to shareholders that often gives a different picture of their financial situation.

Do you think the US model is OK or should the US adopt the UK model? Why or why not?

LostSoul3412 · Joined: 11 Feb 2005 Posts: 7781

I wasn't aware of this... American law should be the same as British law in this case. Anything else is fraud and lying to the owners of the corporation (the shareholders).

Otacon · Posted: Thu Sep 07, 2006 9:21 pm Post subject:

1 set. Prevent another Enron.

Eduffy80911 · Joined: 11 Dec 2005 Posts: 4541

there are two issues here

One set of books would be great

A simplified tax code that doesn't encourage accounting gymnastics would be great too.

the solution once again: Get Rid Of The Income Tax

LostSoul3412 · Joined: 11 Feb 2005 Posts: 7781

Eduffy80911 wrote: there are two issues here

One set of books would be great

A simplified tax code that doesn't encourage accounting gymnastics would be great too.

the solution once again: Get Rid Of The Income Tax

:tu:

lilwolf · Joined: 15 Jun 2006 Posts: 12554 Location: idaho

I maintain only one set of books that IRS and the state get to see.

Don't need 2 unless I am commiting a crime or am thinking about it.

Otacon · Posted: Thu Sep 07, 2006 10:53 pm Post subject:

lilwolf wrote: I maintain only one set of books that IRS and the state get to see.

Don't need 2 unless I am commiting a crime or am thinking about it.

Exactly. Like I said, prevent another Enron.

Charlie Man · Joined: 02 Aug 2005 Posts: 4475

I'm pretty sure this isn't federal law, it's a charter issue. I guess you could go federal with it if you really wanted to though.

Winchester · Joined: 23 Aug 2005 Posts: 6495 Location: Montana

Problem is the tax code and the differences between it and generally accepted accounting principles. One example would be the expensing of capital assets. For accounting purposes they are expensed over the estimated useful life of the asset. For tax purposes it's expensed over whatever time period the IRS says to expense it over.

If a publicly traded company reported it's earnings based on tax law you could get very missleading financial statements.

Companies like Enron committed fraud and it was covered up by their auditors. Making them report their earnings based on tax law wouldn't have changed this.

ubikk · Joined: 27 Jul 2006 Posts: 2091

lilwolf wrote: I maintain only one set of books that IRS and the state get to see.

Don't need 2 unless I am commiting a crime or am thinking about it.

Are you a publically held corporation, though? The second "set of books" I'm talking about is the financial report that is released to investors. where they do things to make their profits look better. Like backdate stock options, and stuff like that.

ubikk · Joined: 27 Jul 2006 Posts: 2091

Winchester wrote:
Companies like Enron committed fraud and it was covered up by their auditors. Making them report their earnings based on tax law wouldn't have changed this.

A lot of companies still give a different set of numbers to investors. All I'm saying is that I think they need to either have 1 set of books, or else be required to make both sets available to investors so that the investors can make educated decisions.

ubikk · Joined: 27 Jul 2006 Posts: 2091

Eduffy80911 wrote: there are two issues here

One set of books would be great

A simplified tax code that doesn't encourage accounting gymnastics would be great too.

the solution once again: Get Rid Of The Income Tax

How about a corporate "flat tax" ?

perdidochas · Joined: 06 Mar 2006 Posts: 15408 Location: Florida

ubikk wrote: In the UK, corporations are required by law to make public to their shareholders the exact same set of accounting books that is used to assess their taxes. They may not show a different accounting to shareholders.

In the US, most corporations submit one set of books to the IRS, and create a different one to make public to shareholders that often gives a different picture of their financial situation.

Do you think the US model is OK or should the US adopt the UK model? Why or why not?

I think the UK model, or something similar, should be used. Personally, I think the same set of info that is sent to the IRS should be sent out to the shareholders.

ubikk · Joined: 27 Jul 2006 Posts: 2091

perdidochas wrote:
I think the UK model, or something similar, should be used. Personally, I think the same set of info that is sent to the IRS should be sent out to the shareholders.

I agree. I'd think anyone who buys any stock would like to see all the numbers.

Winchester · Joined: 23 Aug 2005 Posts: 6495 Location: Montana

ubikk wrote: Winchester wrote:
Companies like Enron committed fraud and it was covered up by their auditors. Making them report their earnings based on tax law wouldn't have changed this.

A lot of companies still give a different set of numbers to investors. All I'm saying is that I think they need to either have 1 set of books, or else be required to make both sets available to investors so that the investors can make educated decisions.

I got no problem with both sets being available.

sLiPpY · Joined: 24 Nov 2004 Posts: 9661

lilwolf wrote: I maintain only one set of books that IRS and the state get to see.

Don't need 2 unless I am commiting a crime or am thinking about it.

:clap: I couldn't have said it any better.

lilwolf · Joined: 15 Jun 2006 Posts: 12554 Location: idaho

ubikk wrote: lilwolf wrote: I maintain only one set of books that IRS and the state get to see.

Don't need 2 unless I am commiting a crime or am thinking about it.

Are you a publically held corporation, though? The second "set of books" I'm talking about is the financial report that is released to investors. where they do things to make their profits look better. Like backdate stock options, and stuff like that.

NO, my businesses are not shareholder controlled and will never go public. The second set of books should not even be needed . The end of quarter or end of year financial report should reflect "EXACTLY" what the numbers from the only set of books is.
That way there is no attempted fraud and no one gets nailed (enron & others) by a corrupt corporation.

As I had said the only reason I would want 2 sets of books is if Iwas a crook or was intent on committing a crime such as fraud or embezzlement.

ubikk · Joined: 27 Jul 2006 Posts: 2091

Charlie Man wrote: I'm pretty sure this isn't federal law, it's a charter issue. I guess you could go federal with it if you really wanted to though.

You could use federal law in as far as the ownership in a publically held corporpation usually crosses state boundaries. You could require them to show the IRS books to shareholders. They could still make up their own set of numbers that they think better represents their financial picture. Then the investors could look at the two and make a more informed decision.

Iro978 · Joined: 09 Sep 2006 Posts: 14

ubikk wrote: In the UK, corporations are required by law to make public to their shareholders the exact same set of accounting books that is used to assess their taxes. They may not show a different accounting to shareholders.

In the US, most corporations submit one set of books to the IRS, and create a different one to make public to shareholders that often gives a different picture of their financial situation.

Do you think the US model is OK or should the US adopt the UK model? Why or why not?

I think the US model should definitely be up to snuff with the UK model. This fraud is exactly what Enron used to bilk money from its workers and then go belly-up, letting the bigwigs get by with anything they wanted to get by with from the phoney books. It deceives investors AND the government.

Quicksurf · Joined: 06 Sep 2005 Posts: 4675

I definatley agree with the first option.

What's interesting is that you would think the IRS would catch on, and notice the difference between the financial reports sent to the share holders and the reports sent to them. :think: