Preface

• Author: Vern Krishna
• Pages: 19-20

Preface xix

Preface

All commercial legal arrangements have nancial and accounting

implications. Similarly, all nancial statements reect relationships

from consummated and, sometimes, potential, commercial trans-

actions. Hence, the inextricable link between law and accounting

requires lawyers, directors, managers, and investors to have an

understanding of nancial statements.

e purpose of this primer is to educate users, and potential

users, in the art of reading and understanding nancial statements

aer they have been prepared by accountants. is is not a text on

preparing nancial statements.

e events of the past decade illustrate the central role of prop-

erly measuring and recording nancial information in both private

and public corporations. Events such as Livent, Enron, Hollinger,

WorldCom, Tyco, and, most recently, Nortel, are graphic examples

of the need to understand nancial statements in the regulation and

management of corporations. In each of the above events, account-

ants and management played the central role in preparing nancial

statements. However, it was le to others — lawyers, investors, and

directors — to interpret the results and make decisions. Users who

are untrained in reading nancial statements are vulnerable.

Lawyers and directors interact with other professions in inter-

preting, draing, and litigating issues involving nancial information.

Although there are many textbooks on accounting and preparation of

statements, there are no easy-to-read texts aimed specically at non-