Monthly Archives: February 2008

Question: why would companies overstate inventory

Answer: There are a couple of reasons why a company might overstate inventory. They both relate to reducing expenses and therefore increasing the company’s profit.

If inventory is overstated, it means that cost of goods sold is understated. This could be a case of not writing down inventory that has lost value, or of simply not expensing out items of inventory that have already been sold.

Inventory can also be overstated by dumping business expenses into inventory. What better place to hide expenses that you don’t want to properly recognize in the current year.

And it’s pretty easy to manipulate inventory figures. There are a ton of individual transactions throughout the year, and the auditors can’t possibly test many of them. And inventory counting procedures at year end are easily circumvented to cover fraud. This is a financial statement line item with a very high risk of fraud.

No matter the motivation or the mechanics of how it’s carried out, overstated inventory quite simply causes a company’s profits to be overstated as well.

The Democrats swear that “universal health care” will be fabulous for all. No one really knows “who” is going to pay for it, but if enough voters think it’s going to be “someone else,” that’s good enough for them.

But socialist health care systems don’t work, and all we have to do is look to the north and to the east to see examples. Here’s a fantastic example from Britain, by way of WenchyPoo’s blog…

There’s a little practice in Britain called “patient stacking.” Treatment at the hospitals is so slow, that a guideline was issued which said patients couldn’t be held in a hospital waiting room for the emergency department for more than four hours. Read More →

This slide show explains it nicely. Please don’t look at it if foul language offends you.

If there’s one silver lining to this case, it’s that the defendants are apparently admitting that they cheated Social Security. But now the bigger problem is that they’re saying it’s the government’s fault.

Last month 83 people were charged with participating in a $663,000 fraud that spanned 15 years. The defendants are accused of falsely telling the Social Security Administration that their benefit checks were lost. They would receive a replacement check, and cash both the replacement and the original (which was never really lost).

But in true American style, the defendants say it’s not their fault. It’s actually the government’s fault that they stole money with this scheme. How could it be the government’s fault? The defense says that when the government found that both checks were cashed, they asked the defendants to repay it. *gasp* Really? Read More →

Some people wonder why we have a generation of lazy losers coming up in the United States. I don’t wonder at all. We have parents who aren’t involved in their children’s lives. Kids whose bodies have been rotted from the inside out, thanks to junk food and fast food. Families that value material goods over quality time and good relationships. An entitlement mentality that our government encourages and rewards.

And of course… we’ve got the issue of education. Children aren’t learning what they need to learn to be successful in life. Their math and reading skills are poor, and the blame rests squarely upon the teachers, their unions, and the school administration. Bad teachers are protected by the unions, and there are no performance standards for teachers. They do what they want and the union protects them. Read More →