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You are approached by the management of a small start-up company that is planning to go public. The founders are unsure about how aggressive they should be in their accounting decisions as they come to the market. John Smith, the CEO, asserts: "We might as well take full advantage of any discretion offered by accounting rules, since the market will be expecting us to do so." What are the pros and cons of this strategy? As the partner of a major audit firm, what type of analysis would you perform before deciding to take on a new start-up that is planning to go public?

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What type of analysis would you perform before deciding to take on a new start-up that is planning to go public

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A firm that is planning to go for an IPO in the future need to prepare for the IPO well in advance, which includes preparation in terms of making the accounting statements fully audited and in compliance with the laws and regulations prescribed by the regulatory bodies. As we all know, a public company is subject to stringent disclosure norms and have to make their accounting practices much more transparent and disclose all material information and financial details in the interest ...

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Sheetal Jain, PGDM
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  • BComm, University of Delhi
  • Post Graduate Diploma in Management (Equivalent to MBA), All India Management Association
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