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Essay / Research Paper Abstract
In recent years the failure of companies such as Enron, WorldCom and Parmalat have shaken the confidence of the markets and investors. This 6 page paper considers the impact that this has had on corporations and the accounting profession as a whole. The bibliography cites 5 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEaccenron.rtf
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Unformatted sample text from the term paper:
such as Enron, WorldCom and Parmalat where the companies have gone into bankruptcy due to the falsification of accounts and the way that the accounts were drawn up and presented.
In the past, for many accountants, there was a grudging admiration given to them for the way they may undertake creative accounting, remaining within the letter of the law but
being seen as finding loop holes to find ways around the laws and regulations so that their clients could get their own way. However, the high levels of loss of
companies such as Enron, where it was not only investment firms that loss their money, the human impact was also seen on the news with employees loosing their pensions.
The reason for the impact on accounts for Enron, as well as others is the way in which the annual accounts were misstated. For example, for Enron, the collapse began
with a statement that between 1997 and 2000 there had been an over statement of $569 million and that these years were unreliable (Leone, 2002). For Parmalat it emerged that
over thirty years the company has hidden over ?14.5 billion (Kapner, 2004). These accounts were prepared by the accountants and the trust in accountants and the way accounts were prepared
was being shaken. The entire financial basis of the stock markets requires that there is a level of trust placed in the accounts that are prepared and presented. The
purpose of the annual accounts is to present the financial performance of the company for the last year, with the main stakeholder group being the shareholders, who are the owners
of the company. If this is a form of primary data then the accounts that prepare this have to have a degree of trust, otherwise, as seen after the fall
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