Define: Accounting Scandals

UK Accounting Glossary

Definition: Accounting Scandals


Quick Summary


Accounting Scandals are instances when corporations have been found responsible for serious breaches of Accounting Ethics.



What is the dictionary definition of Accounting Scandals?

Dictionary Definition


Accounting Scandals are instances when corporations have been found responsible for serious breaches of Accounting Ethics, typically by falsifying or manipulating information so that their financial statements do not provide a true and fair view of the company’s actual performance.

 


Full Definition


Often, this involves deceptive adjustments to their balance sheets or profit and loss accounts – using methods such as:

  • Hiding expenses.
  • Inflating revenue.
  • Moving debts off-balance-sheet.
  • Manipulating reserves.

Whilst Senior Executives have on occasion used such means for private gain, the objective more often than not is to create a false impression of Corporate success in order to meet the expectations of the financial markets.

One of the most notorious examples of accounting scandals in recent times is the Enrol scandal of 2001, this particular examples effectively demonstrates the devastating impact of both false accounting and failures in auditing.


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