Saturday, September 30, 2006

Backdating at what cost?

Jack Ciesielski,CPA, at his AAO Weblog discusses the costs of backdating. It is an interesting read. He opines that the market may not have digested some costs as they remain unknown - those being taxes and audit costs.

As for audit costs: (Emphasis added.)

Do shareholders deserve to know? Yes. Should they complain about the cost? No. If something unfavorable to shareholders has occurred in a company in which they invest, they’d be foolish not to want to know. That’s what the audit function is supposed to provide the shareholders, so they shouldn’t have a problem with audit fee increases due to this activity. (If there’s a problem with audit fees at all, it should be that they didn’t reflect this kind of work ten years ago.)

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