Nothing ventured, nothing gained: an overview of venture capital

Article Abstract:

1985 figures indicate that venture capitalist investments amounted to $2.29 billion, but many accountants still do not understand how the industry works. Venture capital investments have a unique nature. They balance high risk with a higher rate of return. Candidates for venture capital investment are companies not yet positioned to be traded publicly. The objectives of venture capitalists objectives are respectability, profitability, and liquidity. When assessing candidates for investments, venture capitalists assess: a company's long term horizons; the level of risk; the lack of access to a secondary financial market; and the necessity for subsequent financing before liquidation. Factors that make venture capital investments unique include: a large monetary commitment; a limited time-frame for investment; and the high-level risk due to the lack of a company track record and the possibility that the emotional commitment present in the management of many start-up companies may cloud their financial judgement.

Venture capital, Accountants

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Risk management: balancing the costs: requiring insurance disclosure

Article Abstract:

Some companies are stressing risk management as part of corporate strategy to hold costs during the present liability insurance crisis. Limited or reduced coverage forces companies to obtain claims-made liability, self-insurance and risk management, or coverage provided by captive insurance companies for groups in the same business or with similar risks. The disclosure of insurance coverage on financial statements permits an assessment of the exposure to noninsured risks. The Task Force on Disclosure of Insurance of the Accounting Standards Executive Committee (AcSEC) did recommend that disclosure be required. The AcSEC, however, approved the Task Force report but changed the required disclosure to an 'encouraged' or recommended disclosure.

Planning, Accounting, Risk management, Corporations

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