Effects of Manipulative Accounting Practices

This paper examines the use of manipulative practices by rateants and the impacts of their manipulation in an ethical context. In particular this paper discusses the major account statement scandals in modern years and the effects on the history industry. Users of fiscal statements typically assume that pecuniary statements are presented slightly and thus rely on them to make sparing decisions. This is non always the case as preparers of financial statements can be persuaded to distort or manipulate financial statements to tailor the general message the financial statements present to suit their needs. We curb seen logical implication of this with the Enron and WorldCom scandals. This is typically described as creative story or earnings management and as we encounter seen in new-made years this practice can have enormous economic consequences and greatly impact write up standards. In the past ten there have been a number of major accounting scandals that have oc curred. The most famous accounting scandal was potential with the Enron Corporation. The Enron Corporation filed for bankruptcy protection in 2001 (From collapse to convictions: a timeline, 2006). The events that led to this included years of fraudulent accounting. Although many shareholders of Enron conceit that Enron?s operations had promising returns they were unaware of the true financial position that Enron was in.

Executives of Enron engaged in ?creative accounting? to peel off many of their liabilities. By utilizing special purpose entities (SPE), Enron was able to cloak millions of dollars of liabilities and manipulate their financial ratios and credit ratings to what investo rs sought in the stock market. WorldCom wa! s another major accounting scandal that took place in the last decade. When WorldCom filed for bankruptcy protection in 2001 it went down in United States history as being the largest bankruptcy to have ever been filed (The WorldCom Story, 2006). If you want to get a full essay, divine order it on our website: OrderEssay.net

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