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Report: Critically evaluate the role of accounting in the collapse or failure of your company - Essay Example
Pages 7 (1757 words)
Name: Course: Date: The role of accounting in the collapse or failure of Caja Mediterraneo (Cam) Bank CAM bank has been a recognized financial institution in Spain, which has been serving a large customer base, to the extent of being classified as the fourth largest savings bank in Spain, by the year 2007 (manta 2012, Web)…
However, the most cited reason for the collapse of the bank is the application of Creative accounting by the top management of the bank, seeking to serve their own interests and deny the general public an opportunity to get a true glimpse of the nature of the bank’s financial situation (ANCODEESPANA 2012, p7). This has led to the recent CEOs of the bank being removed from their position, owing to the culpability in the accounting irregularity. In addition to the contributions of the top management in the collapse of the CAM Bank, the auditors of the bank’s books of accounts participated in the same questionable practices, since they did not raise any question to the discrepancies realizable in the accounting statement of the Bank, despite there being sufficient grounds to indicate such discrepancies (Penty 2011, Web). Therefore, the collapse of the CAM bank can be traced to accounting practices, and thus this discussion seeks to investigate the role of accounting in the collapse or failure of Caja Mediterraneo (Cam) Bank, with a view to understanding the specific accounting concepts that were applied. The role of accounting in the failure of the CAM Bank can be traced in the accounting concept of creative accounting, where loans to directors were offered at low rates and bonuses (IMF Country Report 2012, p22). ...
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