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Earnings Management: The Continuum from Legitimacy to Fraud.
Finance & Accounting
Pages 4 (1004 words)
Earnings Management: The Continuum from Legitimacy to Fraud [Name] [Date] Introduction Currently, fraudulent auditors’ reports and many other options of fraud occurrence in the process of money earning cannot be denied. Fraud in earnings management can occur on the following reasons: fraudulent financial reporting (financial misstatements) or misappropriation of assets.
A scope of qualitative issues Various managerial activities can be hazardous for earnings allocation and distribution and earnings management can be a challenging issue. Different earnings management activities are focused on legitimate choices focused on account provision for transactions and for other events (e.g. when accounting estimates and judgments are in compliance with generally accepted accounting principles (GAAP). Legitimate management decisions can be influential for reported earnings. There is an intentional measure taken in the process of earnings management, such as fictitious transactions constituting constitute fraud. There are many cases, when the right-of-return privilege has been concealed from the auditor and fraudulent reporting occurs. It is appropriate to focus on exact facts and their influence on occurrence of fraud earnings management. Further consideration is devoted to the internal and external influential factors in the area of earnings management. Of course, the main emphasis is made on legal basis of earnings management and processing, but very often some other secondary triggers can evoke a reason for fraud. ...
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