Business Ethics

Creative Accounting Practices and Introduction Creative accounting is a euphemism for accounting and monetary malpractices by corporations to cover up for incompetency and mismanagement Some scholars (Chong 2006 , 1 ) maintain the practice is non illegal but rather can save be termed as wrong which also depends on an individual view Application Used by corporations when preparing financial statements to cover irregularities and incomprehensible earnings Examples of its Applications In calculating depreciation due to the infixed methods use in its determination when it is still in its multipurpose life Inclusion of non recurrent expenditures or an expenditure that occurs only erst in the financial statement e .

g a low suit expenses Effects They mislead investors who view them as irrelevant and might non have any decent on the future earnings Recent stains Involved Enron cumulus and it is the largest financial and accounting in the United States and it led to its bankrupty Enron filth The financial statements contained of one time expenditures and losses Used wonted(a) formulas that would indicate a higher profit Reassured investors throw up in the face of an eminent bankruptcy the financial statements were non easily understandable Company s earnings or loses were not clearly indicated Implication of the Scandal It set an appropriate scenario and build to other corporations wishing to use the same means to deplume sh areholders It has exposed the malpractices t! hat exist in the business world and the wrong nature of the practice Sarbanes - Oxley Act of 2002 Enacted as a take on of the Enron scandals and meant to curb similar occurrences Contains II sections that regulate corporate financial reporting It requires the Security and Exchange Commission (SEC ) to enforce and the grant in the act Conclusion Passing of Sarbanes- Oxley Act of 2002 provides corporations with the peckish ethical and legal guidelines on investor relations It has stigmatized and brought to the surface prevent views on yeasty accounting References Chong S (2006 ) Ethics of fanciful accounting Wikipedia (2007 ) Enron Scandal Wikipedia (2007 ) Sarbanes-Oxley Act Balance...If you want to get a full essay, order it on our website: BestEssayCheap.com

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