Methods Of Aggressive Accounting By Issuing Financial Statements

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Facts Several companies have performed methods of aggressive accounting by issuing financial statements to exaggerate their value. Either over inflating revenues, assets or cash flows, or understating any debts and expenses are examples of this type of fraud. These accounting swindles allow companies to have an efficient public appearance to investors and potential creditors. Nevertheless, according to a recent journal article from (Chen & Huang, 2013), these deceitful activities led to abnormal stock returns and unfavorable open-market purchases and repurchases. The statements from the financial disclosures were so unclear, yet seemed too good to be true. Consequently, a wide number of corporations received complaints from investors under the regards of the published financial statements. Nonetheless, these inaccuracies, whether reported or unreported, led corporations to go into debt with both creditors and investors. One major instance of this occurrence is the Enron Bankruptcy. In the case of Enron Corporation, the accountants hid most of its debt, expenses and liabilities from the world. Some transactions and forms of debt were also not reported at fair value. Accountants and managers considered these duties as legal between the 1990s and early 2000s since it was not against the GAAP (Generally Accepted Accounting Principles). Furthermore, according to the article, Enron ten years later: Lessons to remember, even during the financial examinations, the auditors of Enron
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