The result is a set of financial reporting rules that certainly create grossly incomparable financial statement elements across country borders. However, that incomparability can be just as severe when comparing financial reports of even the closest industry peers in the same country.

Upon closer examination, and possibly most disturbing, is that even simple trend analysis of a single company’s performance from year to year can be materially unreliable.

It’s important to note that it’s not just the income statement and balance sheet that are so distorted. The controversy over the establishment of the statement of cash flows is well-documented, though often overlooked by most financial analysis. Several members of the FASB itself called out the problems of cash flow from operations, investing, and financing as mis-categorized, “misclassified,” and “likely to be misunderstood” by most users of the financial statements.

On that last comment, time has show the comments of those FASB members to have been prescient.