Sharing Knowledge in Smallcaps

[Alydyr]

Sounds about right. This has always been my biggest issue with Sarbanes Oxley too.

There is no materiality threshold if an "exception" is found when performing SOX testing (I.E. an improper or no approval on a invoice).

Accounting in private/public companies are backward. Public company CFO's are forced to build large accruals for everything on the liability section of the balance sheet because they have to get the data to the auditors quickly. By default, this means that balance sheets are loaded with too much debt and the cash ratio's are wrong. To me this is heavy duty managing of income, and these accruals can be released just before a quarter end to inflate (or smooth) a quarterly profit number.

Private companies don't have that pressure, so the accruals are minimal, balance sheets tend to be more accurate.