Forbes, in conjunction with a quantitative analysis firm called Audit Integrity, recently ranked the most trustworthy publicly traded companies in America. Audit Integrity uses a quantitative metric score to assess the risk of a company’s accounting policies and corporate governance practices that they call the Accounting and Governance Risk rating. The assessment uses data from income statements and balance sheets along with more than 100 qualitative factors to create the rating.
We all love lists, but is a single-risk measure a good thing? And, while I like to think that there are useful consolidated metrics that could be used for assessing risk, the synthesis and interpretation of metrics still requires an experienced hand and qualitative judgment.
But even so, I guess we can take strange comfort in knowing that someone, somewhere, is crunching our rev rec policy into a statistical model.
