Lately I've been coming across more and more companies that are filing their results late or giving their auditors the heave-ho. Of recent note here are Flagstar Bancorp
Healthcare Realty, like Income Investor selection Health Care REIT
Instead of treating this entity as a separate company, Healthcare Realty needs to consolidate its operations on its own books. That's the short version of the story. However, having read the transcript (courtesy of Thomson StreetEvents) and the back and forth between the analysts, I think this specific issue should not be a problem because of its small size in relation to the total business. But that doesn't mean it doesn't have to be accurately accounted for, and that's the hang-up.
While this issue shouldn't materially affect the financials of Healthcare Realty, its somewhat late discovery has created a delay in getting the financials out and apparently has led to a switch in auditors (those are my words, not Healthcare Realty's).
As an investor I much prefer to have the audited financials in front of me. Not because I don't trust management but because the auditor's sign-off in the 10-K is an important piece of the puzzle. Despite all the problems in the media in recent years about auditing firms, the job of the auditors is an important one, and I've seen them add value.
So what's next? Well, I plan to read through the unaudited financials from Healthcare Realty, and I plan to listen to a replay of the earnings conference call that was held today. If the situation is particularly attractive, I may consider it, but I'm far more likely to wait for the fully audited financial statements.
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