A to Z Challenge Archives – Page 39 of 44

April 20, 2021April 21, 2021

Q is for Qualified Opinion

Normally, I prefer facts over opinions and prefer the fact-giver to be qualified. However, when it comes to auditors, I do want opinions, but–oh boy–I want mine Unqualified.

The raging debate over audit opinions is one of the juiciest parts of accounting. Aside from the myriad types of Fraud (See letters “F” and “K”) that can happen, companies with good intentions still stretch their accounting practices a bit. Even when they’re large and public, with their financials in plain sight. Especially when they’re large and public, it seems. Just ask GM and Toshiba.

But let’s step back a minute. What does an auditor do and where does a Qualified Opinion come into the picture?

I’ve known plenty of auditors. They don’t always wear glasses.

April 19, 2021April 20, 2021

P is for Pacioli

Portrait of Pacioli attributed to Jacopo de’Barbari at the Capodimonte Museum in Naples.

Luca Pacioli wrote the book on accounting. He also wrote the book on algebra, geometry, mathematics, and arithmetic. It’s a musty old book by now, fragrant with the smell of parchment, dust, museum purifiers, and centuries passing. But Summa de arithmetica, geometria, proportioni et proportionalita contains the world.

Pacioli’s *Summa de Arithmetica*, photo from the Smithsonian.

Da Vinci’s Buddy, Della Francesca’s “Admirer”

Pacioli was born in Tuscany, studied in Venice, taught in Rome, Croatia, Naples, and eventually settled in Milan under the patronage of Ludovico Sforza. Sforza supported another famous scholar: Leonardo.

April 17, 2021April 18, 2021

O is for Overhead

Overhead is a term used by people who are overhead. No one wants overhead. No one wants to be overhead. No one wants to pay for overhead. But we’re all basically overhead.

Overhead, figuratively and literally. Photo from wikipedia.

Pity the Poor, Ignoble Overhead

Overhead refers to the costs a company incurs for expenses that are not directly related to whatever is being produced. Typically, these are “fixed” costs, costs that don’t change regardless of how many hamburgers are flipped or customer calls are handled. Examples might include everything from the CEO’s salary to the desks to the fees for Internet connectivity.

Most people, when they think about paying for a product, focus on only the product itself. I should only have to pay for the sandwich. How can it cost so much to make a pill? They think of a product as only the sum of the ingredients, rather than factoring in the distribution, packaging, design, testing, communication (advertising), inventory, or any number of other costs that have to exist in order for them to have the ability to buy that thing at that time at their convenience.