What is the best way to Monitor Accounting Issues?
Our disciplined process requires that all issues must be quantified in order to ensure their legitimacy.
In addition to assessing the valuation impact of material accounting issues in a company, it is useful to track smaller issues over time, lest they become more serious. Our disciplined process requires that all issues must be quantified in order to ensure their legitimacy. As such, we provide the most in-depth Earnings Quality (EQ) scoring process we know of in North America.
Our EQ ratings comprise six key areas that have an impact on overall earnings quality and their impact on valuation. Companies are scored in each area, and receive a total grade out of 100. These scores are based on our proprietary scoring model comprising forensic accounting red-flag checklists that we have amassed by examining hundreds of companies using insider documents.
Our EQ scores are robust and comparable across companies and sectors, and provide added insight into the names we cover. By contrast, some research firms only provide a single number out of five or ten as an 'accounting' score, which clearly has very limited usefulness beyond mere appearances.