Accounting: creative or forensic.

9.8.2009.

MAS means "emas" or gold. Whoever is responsible for producing the current accounts of MAS, recently made public, should be given a gold medal, no pun intended. It's truly creative. It should also be given a forensic auditing. The problem is, like law, it'll be one set of accountants vs. another, so which kettle is black? 

The plain and simple statement to be declared to the owners i.e. the Government should be: did the company make profits from its operations ? If MAS did this time, how do you explain the huge loss the last time ? 

You can't do enough to make all the gobbledigooks in the financial statements comprehensible to the general public, who don't know double entry from "no-entry". Hedges and derivatives aside, all the notations and asterisks to the accounts sheets would only confuse, and perhaps intentionally, or even be legal. Remember how Iacocca boasted that Chrysler settle their loans the old way - by repaying them ? And all he did was to adjust the depreciation policy of that company. Remember the pre-Idris Jala days in MAS when the company reverted the entire fleet to Khazanah and re-rented it, and cut on depreciation ? It's always depreciation. And perhaps it's moot. The whole gang should be depreciated. 

The push-cart entrepreneur pays in cash for all his raw material, gets cash  for all his mee-goring mamak or whatever he's peddling. He subtracts one-flow from the other when he goes home, and that's his profit-and-loss. He doesn't charge his own salary and cart maintenance. That's also why the owner-operator truck driver never make losses. 

But running MAS is, well, a different push-cart (even if there are faintly recognizable similiarities). For one thing, the CEO's compensation alone could tip the push cart over. Retailers who sell for cash the goods that he gets credit for will also realise substantial profit from cash-management alone. Sometimes, for the large enough turn-over, such a profit equals that of pure operations. This is the legitamacy resorted to by MAS, perhaps. That's OK, but the magnitude of operations surely dictate true transparency, and demands true disclosure and "due diligence" (the accountants have the terms, even if they don't apply them) so that the people know which is "emas" and which is "suasa". 

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