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Essay / Research Paper Abstract
4 pages in length. Stagnancy and interpretation are two elements that have no place within the fundamentally stringent nature of accounting procedures, yet typical standards have reflected precisely this approach to the conceptual aspect of principles-based methods. The extent to which Enron and WorldCom helped to redefine accounting procedures is both grand and far-reaching; that the industry has moved away from a principles-based to a rules-based approach speaks to fortifying the former with two integral - and wholly absent - components. Bibliography lists 4 sources.
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4 pages (~225 words per page)
File: LM1_TLCAccountPrin.rtf
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extent to which Enron and WorldCom helped to redefine accounting procedures is both grand and far-reaching; that the industry has moved away from a principles-based to a rules-based approach speaks
to fortifying the former with two integral - and wholly absent - components. "...One of the overriding financial accounting concepts is the usefulness of accounting information to decision makers.
This implies that the information should be relevant, reliable, and comparable across reporting periods and entities...A principles-based standard often becomes a rules-based standard in an effort to increase comparability and
consistency" (Shortridge et al, 2004). According to Batavick, it was the blatant lack of judgment and unethical decision-making that accounted for Enrons fall from grace, not the manner by
which industry standards were implemented. By using what is termed off-the-books partnerships along with convoluted accounting techniques in order to conceal losses, Lay and Skilling worked diligently to hide
the truth from employees and investors who had no idea what was about to occur until it was upon them. This, Batavick says, has little to do with accounting
procedure and everything to do with "the importance and total interdependence of governance at the Board level, ethical behavior at the management level and diligence and independence at the auditing
level" (Anonymous, 2003). From a broader perspective, one of the main reasons for Enron black mark upon the entire industry reflects a blatant
disregard for social responsibility: being aware of the impacts ones actions have upon the rest of society. Far too many people believe it is their inherent right as human
beings to exercise whatever choices they see fit, in spite of the fact that their selfish actions may cause harm or damage to others. Indeed, this is precisely the
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