Detail What Drives Earnings Management ?   Oleh:  Rosenfield, Paul Jenis: Article from Bulletin/Magazine Dalam koleksi: Journal of Accountancy vol. 190 no. 4 (2000), page 106. Topik: earnings; drives earnings; management Ketersediaan Perpustakaan Pusat (Semanggi) Nomor Panggil: JJ85.11 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada     Lihat Detail Induk Isi artikel Two years ago, SEC Chairman Arthur Levitt charged that widely publicized accounting problems at a number of companies were in danger of undermining U. S. capital markets. One of the processes he blasted was earnings management - an effort among the issuers of financial reports (managements and boards of directors, who have the authority to specify the contents of the reports) "to satisfy consensus earnings estimates and project a smooth earnings path” (see "Arthur Levitt Addresses ‘Illusions,’” JofA, Dec.98, page 12). The accounting literature defines earnings management as “distorting the application of generally accepted accounting principles.” Many in the financial community (including the SEC) assume that GAAP deters earnings management. However, my opinion, which I have expressed in a letter to Chairman Levitt, is that earnings management results less from distortion of the application of GAAP than from the application of inherently faulty GAAP. GAAP’s faulty design permits earnings to be managed in two ways. The first is by allowing businesses to report income they have not earned. For example, the FASB staff has called the pooling - of - interests method of accounting that follows a business combination essentially a means to report higher earnings without having to earn them. It is well known that financial report issuers prefer to report the highest income possible. That desire is tempered, though, by fears of attracting increased demands from a company’s stockholders and employees for higher dividends and salaries and from the government for more taxes ; there’s also the risk that if the company presents too rosy a financial picture, that will lure new competitors wanting some of the gravy. Those same financial report issuers, however, have no such reservations about trying to achieve stability of income reporting (also known as smoothing) - the fundamental goal of traditional financial reporting - which is the second way they manage earnings. Their wish for stability of income reporting far exceeds their desire for higher reported income. An example is the way companies have accepted income tax allocation, which both lowers and stabilizes reported income. University of Seattle Accounting Professor Loyd C. Heath, who won the first AICPA Wildman Award for 1978 for his research on the evaluation of solvency through financial reporting, keeps tabs on report issuers’ participation in accounting standard setting. Recently, he quoted a former FASB member who said 95 % of the comments the board receives from companies fall into one of three categories : "Don’t make any changes ; don’t move so fast ; and don’t make income volatile - don’t let it fluctuate.” Opini Anda Klik untuk menuliskan opini Anda tentang koleksi ini! Kembali

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