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Essay / Research Paper Abstract
This 10 page paper considers the factors that create and maintain incentive structures for firms to indulge creative accounting along with the incentive structures for key users to ignore the creativity. The writer identifies the opaqueness and weak governance combination that lead to these problems. Italian company Parmalat is used as an example, references are also made to Enron. The bibliography cites 20 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEcreative.rtf
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Unformatted sample text from the term paper:
their clients, remaining within the law. The same admiration has been extended to company accountants when they are saving the shareholders money with creative accounting, seen as working on their
behalf. Whilst the ability to save tax and take advantage of tax breaks may be a professional duty, but it is also indicative of a there are double standards when
it comes to the perception of creative accounting. When looking at the culture in investment, both at board level and with the investors, there can be seen as many
incentives that encourage and promote the use of creative accounting. Whilst there are many guidelines that should be observed, many of these especially in Europe, are codes of conduct rather
than regulatory requirements, and as such a great deal of the process relies on integrity and judgment. There are also a variety of accounting tools that can be used, and
measures that can be taken to manipulate results in a predetermined way. When this is combined with the short termist culture to increase wealth, with many directors having at least
a part of their salary paid in share or share options or a bonus associated with the company performance or the company share price performance. There are also the wider
culture issues that encourage this and place an onerous duty on those who may be in a position to speak out against creative accounting. There are many cases that demonstrate
this difficulty, one of the most recent is that of Italys Parmalat, which has been referred to as "the Enron of Europe" (Hays et al, 2004). It is easy to
cast blame at only the creative accounting and blame the primary parties to this accounting fraud, but the environment in which it occurred can be argued to give tacit agreement
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