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The Financial Numbers Game, Detecting Creative Accounting Practices
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With a certain mind-numbing frequency, users of financial statements—investors and creditors—find themselves buffeted with announcements of accounting irregularities. These irregularities are called many things, including aggressive accounting, earnings management, income smoothing, and fraudulent financial reporting. While they may vary in the degree to which they misreport financial results, they have similar effects— financial statements that serve as a foundation for important investment and credit deci- sions are incorrect, improper, and worse, misleading. Companies of all sizes and types, from the start-up to the venerable, from those traded on the “Bulletin Board” to the “Big Board,” are susceptible to the problems we refer to here collectively as creative accounting practices. When these acts are discovered, adjustments are needed. Often, prior-year financial statements must be restated, some- times more than once. Unfortunately, many learn of these accounting problems only after it is too late—after assessments of earning power have been reduced and share prices have fallen precipitously.
Charles W. Mulford and Eugene E. Comiskey - Personal Name
0-471-37008-8
NONE
Accounting
English
2002
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