UAFRS Monthly

This month, we turn to another all-time great value investor the co-founder of legendary hedge fund Baupost Group, Seth Klarman—for his take on financial reporting deficiencies in general and the focus of this month’s report… inflation or more accurately, currency devaluation

When Warren Buffett talks, his comments are worth listening to. And if you were not already aware, Buffett has said a great deal about problematic accounting standards.

I recently had a wonderful conversation with Ralph Nach. Ralph is a former co-author of the Wiley GAAP Guide. He teaches continuing professional education courses for practicing CPAs on many of the most difficult and complex accounting topics. Ralph was also one of the very first members of the UAFRS Advisory Council for Uniform Accounting.

Whitman built impressive investment results over decades. While he accomplished this feat, Whitman also found time to call out the problems with as-reported financial statements under GAAP.

No industry is free from the inconsistent rules of GAAP accounting that create extensive distortions from economic reality. In this issue, we highlight a chemicals company, a payroll servicer, and a diversified industrial conglomerate. Everything from net earnings to total assets is calculated in ways that seem almost arbitrary under Generally Accepted Accounting Principles.

Stock-based compensation (SBC) is an accounting headache. Just last year, PwC published a 250+ page report to help its clients navigate its intricacies.