How About Random Stock Market Access?
Some securities listed on a stock market behave like spoilt children at school! Dodging routine operational controls, and regular customer contact, they hasten to dress the books as each quarter-end approaches. This means anything from cutting corners on the company’s long term interests, to outright illicit activity. Authority is used to stifle any trace of dissent, but painstaking auditors can always uncover matters later. Are accounts of companies in which you have stock market interests dressed to meet your attention needs on fixed days?
Back dating contracts is an old trick used to throw wool in stock market eyes. The ’35-day’ month phenomenon is a common joke when sales people get together to swap their reality stories, and no stock market has the time to check all books and warehouses at the end of each quarter. Large corporations with multiple branches present daunting challenges for the best auditors in this respect. A former Chief Executive of Computer Associates has been prosecuted for such offences, sentenced to over a decade in jail, and has to sell his yacht to pay up for levied fines, but how does a stock market know if all such cases are invariably uncovered?
Every line of a statutory financial statement seems to have some scope for people determined to hoodwink the stock market! Fixed assets may be invoiced at rates to justify extra funds, while executives collect parts of premiums under tables. Accounts Receivable may include transactions for which customers have no intentions of paying, and inventory lists may include items which cannot be used or sold. Some tricks can land the occasional executive behind bars, but perhaps many of them are swept under carpets just before statutory and public scrutinizes become due.
The stock market should plug for a universal switch to Moving Annual Totals with Real Time and Random Auditing. This will eliminate urges to window dress accounts for specific days in a year, and will keep executives on their toes at all times. Electronic accounting systems make such practices easy to implement, and in fact, there are in use in the form of Management Accounting norms in some of the best securities listed on a stock market.