Columbus Business Daily - If a company’s management believes they have reported earnings in a meaningful way, why can the SEC force them?

If a company’s management believes they have reported earnings in a meaningful way, why can the SEC force them?

What you think?

It is not just the SEC really, it is the result of the implmentation of GAAP. When you consider all of the many uses for financial statements, it would be very difficult to assess one company from another if there were differen standards for each. For example, if I am an investor and I am trying to decide between investing in verizon and investing in sprint, the first thing I would do is look at the financial statements. If sprint recognized all revenue on contracts on day one, and Verizon recognized it each month as payment on the contract is made, Sprint is going to look much more profitable assuming both companies are the same size and incur around the same opertaing expense. It could be like comparing apples to oranges, and make it a very difficult decision. If both companies are required to recognize revenue in the same manner, I am likely to get a completely different picture but it would be much easier to compare the 2 companies.