Finance and Accounting : Business Financial Crime - Essay Example

Only on StudentShare

Extract of sample
Finance and Accounting : Business Financial Crime

Earnings management is one of the most popular measures of financial business crimes, occurring in companies on a habitual basis. It can be defined as a process of intentional interference of the management in the establishment of the earnings of a business, misrepresenting the data to show better results than they actually are. Several reasons lead to management of earnings which include manager’s compensation, raising stock price, or pushing for government funding. There are different strategies available that managers can use for the purpose of earnings management and hence satisfy their selfish objectives (Wild, 2006, pp.86-87). With regard to the increase in financial crimes in businesses, and several instances of earnings management being reported, this study focuses on the literature of earnings management and analyzes the cases reported to draw a conclusion with a view on the concerned topic. Earnings management, in exchange listed companies, is not fraud but a case of caveat emptor for investors.
Earnings Management: An Overview
Earnings management is the process of intentionally misrepresenting financial data in the accounting measurements such that the company can show greater profits and more value than it actually has obtained. The process can be “cosmetic” where managers influence accruals without affecting cash flows or it can be “real” where cash flows are acted upon to manage earnings (Wild, 2006, pp.86-87). There are three usual strategies that managers can exploit for earnings management. ...
Download paper

Summary

Financial crimes may include basic company frauds, falsified claims of travel or entertainment, cheque fraud, identity fraud, misappropriation, computer related crimes, or frauds and manipulations in financial statements (Pickett & Pickett, 2002, pp.1-6)…
Author : judd28

Related Essays

International Financial Strategies
The paper tells that the concept of corporate governance has undergone tremendous changes since its origin. Managements always pay attention to update their corporate governance strategy in accordance with the needs of time. The corporate governance policy also maintains the relationship between the stakeholders and the objectives of the organisation. Top level mangers always focus on the impact of their corporate governance strategy on economic efficiency in addition to a strong emphasis on shareholder values. Since a series of corporate failures in 2001 were attributed to accounting fraud,...
12 pages (3012 words) Essay
Finance and Accounting Essay: Financial Modeling
We begin the chapter with the general idea of the VaR and the various approaches to the VaR, the historic application and the application of the same. We also include the evaluation of the VaR at the different possible approaches in the study; a final conclusion is made by the calculations carried out in the study. Introduction: The ‘value at risk’ is an extensively employed risk measure concept in the risk of loss on a particular portfolio of fiscal assets. For a specified portfolio, probability and time horizon, VaR is described as a threshold price such that the possibility that the...
16 pages (4016 words) Essay
Business Enivronemnts
It is evidently clear from the discussion that it is the duty of the project manger to set up the various activities of the development process to deal with the team in an appropriate way. Here Jimaga Ltd is a SME company specializing in the design and supply of promotional brochures. As part of its expansion, Jimaga Ltd has employed me as a consultant to supervise one of their special projects. “This project is concerned with the opening of a building which they recently acquired (35,000 square metres). This new building will permit the company to target and respond to large global...
16 pages (4016 words) Essay
Finance and Accounting Essay: Advanced Financial Accounting
There were some recent changes made in IAS 19 during June 2011 by the IASB and it has a significant impact on the accounting procedures to be followed by the entities regarding defined benefit schemes in the form of pension funds. The time was just right for these changes to take place because it was long awaited by people for IASB to make such changes.
...
12 pages (3012 words) Essay
Finance and accounting essay: International business
domestic capital budgeting project: consideration of additional factors 9 Characteristics of multinational companies (MNCs) affecting the cost of capital 10 Ram plc and Pram plc: Benefits from economies of scale 10 Theory of Comparative Advantage as a motive for international trade: Usefulness 11 Reference 13 1. IBF Supplies Plc: Financial and non-financial factors influencing the proposal of establishing subsidiaries in Eastern Europe, Africa as well as Asia IBF Supplies Plc is one of the leading companies in the UK market in supplying office items to its clients. The company holds a...
11 pages (2761 words) Essay
Small Business Owner: Finance and Accounting Questions
Alert Alarms advocate superior services to clients and aim at client satisfaction at all costs. The legal ownership of Alert Alarms is sole proprietorship. The company is owned by a single owner and all the investment is the done by single owner. There also no protection of personal assets in sole proprietorship (Resource Nation, 2011) and this is the case with Alert Alarms. All these characteristics make the business a sole proprietorship. Sole proprietorship also allows businesses to save on taxes to a certain extent but the debt of the business is secured. People who have lent money to the...
4 pages (1004 words) Essay
Business Account Finance and Accounting Essay
Each of the users has different needs and interest on the financial information. First, the investors require financial information to assist in making investment decisions. Before putting their resources for investment purposes, investors have to evaluate the performance of firms to establish whether the businesses can enable them earn their required rate of return (Fess & Warren 1993). This would help them make investment decision and determine what amount to invest in a firm. Shareholders are also interested in the financial performance of the firm as it determines the dividends they will...
6 pages (1506 words) Essay
Got a tricky question? Receive an answer from students like you! Try us!