Business Ethics

Creative Accounting Practices and Introduction Creative accounting is a euphemism for accounting and financial malpractices by corporations to cover up for incompetency and mismanagement Some scholars (Chong 2006 , 1 ) maintain the practice is not illegal but rather can save be termed as wrong which also depends on an individual facet Application Used by corporations when preparing financial statements to cover irregularities and unexplainable earnings Examples of its Applications In calculating depreciation due to the infixed methods used in its determination when it is still in its multipurpose life Inclusion of non recurrent expenditures or an expenditure that occurs only once in the financial statement e .

g a low suit expenses Effects They mislead investors who view them as irrelevant and might not have any proper on the future earnings Recent stains Involved Enron plenty and it is the largest financial and accounting in the United States and it led to its bankrupty Enron Scandal The financial statements contained of one time expenditures and losses Used customary formulas that would indicate a higher profit Reassured investors scour in the face of an eminent bankruptcy the financial statements were not easily understandable Company s earnings or loses were not clearly indicated Implication of the Scandal It set an appropriate scenario and pattern to other corporations wishing to use the same means to hook shareholders It has exposed the malpractices that exist in the business world and the unethical nature of the practice Sarbanes - Oxley Act of 2002 Enacted as a allow 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 provide in the act Conclusion Passing of Sarbanes- Oxley Act of 2002 provides corporations with the grating ethical and legal guidelines on investor relations It has stigmatized and brought to the surface veto views on yeasty accounting References Chong S (2006 ) Ethics of creative accounting Wikipedia (2007 ) Enron Scandal Wikipedia (2007 ) Sarbanes-Oxley Act Balance...If you want to get a full essay, order it on our website: Ordercustompaper.com

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