Guide to Analysing Companies

ATM
See automated teller machine.
Audit
An examination of a company’s accounts and supporting data
in order to deliver an opinion as to their fairness and consis-
tency, and whether or not they conform to the accounting rules
or principles under which the company operates. The job is
done by an auditor, who makes a report to shareholders. The al-
legations of accounting fraud that accompanied the collapse
of several high-profile companies in the United States at the start
of the 21st century intensified the pressure on auditors to be
seen to be acting in shareholders’ interests, not those of the di-
rectors of the company they were auditing. The sarbanes-
oxley act aimed, among other things, to improve auditing
standards in the United States.
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Audit trail
A step-by-step record of a transaction which allows the regu-
lator of the market in question to trace the ultimate benefi-
ciary of a transaction (and the price at which it was made).
These days such a trail is more likely to be a taped conversa-
tion, an e-mail or some other computer record than a piece of
paper.
Automated clearing house
An electronic payments system in the United States that handles
the bulk of regular payments between individuals, companies
and government agencies. Started in the 1970s when the
federal reserve worried that the country would drown in a
sea of paper, the automated clearing house (ach) processed
more than $12 trillion-worth of payments in 2000. Most are
salaries, payments of interest and dividends, and social se-
curity and other entitlements paid by the government. In recent
years, the system has also become popular for paying insur-
ance premiums, for buying and selling shares, and for pay-
ments between one company and another.
The ach acts through a network of associations (composed
of banks, credit-card companies and so on) throughout the
country. The system has not only saved companies the cost of
processing a growing mound of paper; so far, it has also shown
itself able to meet growing demand.