Advancing a Free Society

The Most Charitable Interpretation of Solyndra: Clueless

Saturday, September 17, 2011

Any rookie business student knows what it means when a company’s outside  auditor  raises “substantial doubt about its ability to continue as a going concern.”  A negative “going concern” verdict means that the auditing firm has concluded, after examining the company’s assets, liabilities, and net income that it is unlikely the company will survive.

Such a ruling warns potential investors to stay clear of the company.

Apparently, one of the few who did not understand this accounting message was President Barack Obama. Instead of staying clear, he made a televised visit to  Solyndra in Freemont, California in May of 2010. There he stated before the assembled employees, press, and TV crews that: "It is here that companies like Solyndra are leading the way toward a brighter, more prosperous future."

Solyndra declared bankruptcy and laid off  its workers on August 31.

This was a strange upbeat message for a President to deliver about a company that received a negative “going concern” verdict from PriceWaterhouseCoopers two months earlier.  The PriceWaterhouseCoopers auditor found cumulated losses of $558 million and negative cash flows. (By the way, these cumulated losses are suspiciously close to the federal loan guarantee).

Continue reading Paul Gregory…

(photo credit: Steve Jurvetson)