The Reasons For European Sovereign Debt Crisis

1437 Words6 Pages
According to the analysis above, the euro crisis could be partly ascribed to previous financial crisis in 2008. After deeply investigation, the failure could have a lot of thing to do with government regulation and management. The reasons for European sovereign debt crisis could categorized into two main issue; income and solvency problem as analyze above. Hence, this part will examine the failure of both private and public sectors from the angle of accounting.
With the accounting aspect, the concept of accountability, representation, and control might describe the failure of euro crisis to some degree. Representation of accounting could reveal various issue about financial organization. However, the whole picture might not be reflect by its representation as explained above. First of all, representation in this situation refers to financial statement. National budgets and accounting tend to be more distorted (Nelson, 1993). Many organization tend to present only good performances to benefit their confidence. For instance, Greece might distorted the amount of debt and deficit of GDP for their advantage such as higher amount of borrowing. Greece fail to represents their real practice and tend to mislead the information to receivers. Subsequently, Greece spreads their debt over the set of rules. Many countries might cover a bad operating process for their own benefit (Chawstiak, Young, 2003). Government might not shows much concern to the issues that derive from accounting
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