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Article: Pro-forma gloss hides dangers.
- Article from:
- Financial News
- Article date:
- January 14, 2002
CopyrightCOPYRIGHT 2002 Financial News Publishing Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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European companies are embracing pro-forma accounting, despite the fact that regulators in the US are studying the dangers of this practice. But analysts and investors would be advised to follow the US lead and look beneath the surface, as these accounts do not always present a true view of an organisation's financial health.
Pro-forma accounts are used to show either the impact of a post-balance sheet date acquisition or how the financial statements would have looked if the group structure at the end of the year had been in place throughout the entire year.
Peter Holgate, senior technical service partner at PricewaterhouseCoopers, points out that ...