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Will Apple’s Accounting Encourage Others to Drop Non-GAAP Measures?

A tipster pointed us to Apple’s transcript from last night’s earnings call, noting that the company has indicated that they will no longer be providing non-GAAP measures. This is a result of the solid that the FASB did for Apple back in September:

We are very pleased by the FASB’s ratification of the new accounting principles as we believe they will better enable us to reflect the underlying economics and performance of our business and therefore we will no longer be providing non-GAAP financial measures.


Our tipster noted that since using non-GAAP measures are a commonly used by companies and analysts, Apple’s declaration that they would not be “providing non-GAAP financial measures,” could potentially change things. It’s one thing if say, Koss were to say they’re not going to provide non-GAAP numbers, but this is Apple.
The company enjoys a top of the mind position, so other companies may embrace this method of engaging with analysts and other users. And since Apple isn’t shy about controlling the information they provide (e.g. Steve Jobs’ pancreas) this seems to be another way for them to dictate the information they are providing.
It’s not a stretch to say that many companies try to emulate Apple; whether or not they will emulate Apple’s financial reporting methods remains to be seen. Strange, because we figured they were just innovative on the gadget front.

When Booking Bogus Revenue, Ideally Your CFO Is the Type to Not Give a Rat’s Ass

James Li and David Chow used to run a shop called Syntax-Brillian Company as the CEO and Chief Procurement Officer respectively. They sold high-def, LCD TVs under the Olevia brand in China. Problem was, they didn’t really sell TVs under the Olevia brand in China. According to the SEC:

[F]rom at least June 2006 through April 2008, Li and Chow engaged in a complex scheme to overstate Syntax’s financial results by publicly reporting significant sales of LCD televisions in China, when in fact the vast majority of these sales never occurred. Li and Chow initially concealed the scheme through the use of fake shipping and sales documents.

Of course, they couldn’t do it alone. They needed a CFO. A CFO who would backdate things when asked and ignore obvious signs of bogus revenue. That man was Wayne Pratt who, from the sounds of it, wasn’t too concerned about ANYTHING:

The SEC alleges that Wayne Pratt, Syntax’s Chief Financial Officer, ignored red flags of improper revenue recognition and participated in preparing backdated documentation that was provided to Syntax’s auditors to support fictitious fiscal 2006 year-end sales. Pratt also ignored indications of impaired assets, agency sales, and potential collectability issues.

So, budding criminals, get on the look out for a guy/gal who is accustomed to shrugging their shoulders and responding “Meh. Whatever.” to your demands. Should work out well for you.

Litigation Release [SEC]
Complaint [SEC]