55, 2009). Interestingly, this is not the first time in the history of United States that its accounting practices, approaches and system has received criticism and strict scrutiny from its stakeholders. After the bankruptcy of Enron and WorldCom in 2001 and 2003, respectively that was also the biggest accounting scandals of their time, the US accounting practices made the headlines all over the world (Ketz, pp. 234, 2003). This paper is an attempt to explore the accounting standards whether they are too flexible or too rigid. The discussion would include looking over the causes of Enron’s bankruptcy rooted in its accounting problem, debate between rules based accounting and principles based accounting and the problems with the possible convergence of accounting standards all over the world. ...Show more
Running Head: American Accounting Scandals American Accounting Scandals American Accounting Scandals Introduction In the aftermath of the financial recession that rocked United States and the entire world, policymakers, stakeholders, experts and other observers are raising their fingers on various events, policies, and happenings that led the country to this disastrous recession…
Creative accounting is an innovative yet unethical practice that converts the sense of an accounting treatment while being within the scope of treatment prescribed by accounting standards. It can be said that taking advantages of the loopholes present in accounting standards is the other way of explaining creative accounting.
Usually, before investors decide to invest their money in any investment company, they seek to ensure that the financial situation of the company is secure and reliable.1 Also, they need to have confidence that the company will be properly managed and controlled in order to be profitable.
The manipulations have taken place in different forms. While analysing the creative accounting in the context of Greek, Baralexis (2004) found out that the manipulation of accounting has been well documented in accounting literatures and there are examples of manipulation in account books dating back to 1920s.
Census Bureau). Massachusetts alone contributed to 2,144 of total establishments and $1,778,516 of received revenues (U.S. Census Bureau). Although there was little information about the accounting, tax return preparation, bookkeeping, and payroll services, Boston has a large financial and insurances service industry of 5,584 establishments.
So, these reports need to be meaningful, transparent and comparable in their content.
Since 2001-2002, several US and other countries' corporate accounting scandals have shaken the confidence of the investors on the financial reporting process and it has reflected in the market value if corporate equity securities.
This has been highlighted by the numerous financial reporting scandals that have arisen lately that have had national and international repercussions. To understand the importance of this unique field, one needs to understand what financial reporting does.
As Fedoryshyn and Tyson (2003) have indicated, the factors responsible for this decline are likely to be many and varied. One of the most alarming trends related to the reduction in accounting majors is the diminishing number of high school students who express interest in pursuing professions in accounting.
Here we will be discussing one such scandal which rocked the world in October, 2001 – The Enron Scandal. The company was established in the year 1985 and quickly rose to become one of the major organizations. It became a very famous company and reigned all through the