Can the ASB Really Reduce Creative Accounting?

Front Cover
GRIN Verlag, Aug 23, 2007 - 32 pages
0 Reviews
Essay from the year 2001 in the subject Business economics - Accounting and Taxes, grade: A+, University of Warwick (Warwick Business School), 8 entries in the bibliography, language: English, comment:, abstract: The spectacular breakdown of Polly Peck impressively demonstrated the role of creative accounting in the 1980s. Although many companies were not doing well, creative accountants could easily deceive shareholders by manipulating figures. The Companies Act requires financial statements ′to give a true and fair′ (i.e., factual and unbiased) ′view′. This enables user groups to properly assess a company′s financial position. If, however, accountants are free to arbitrarily manipulate figures, this becomes impossible. Therefore efforts had to be made to confine the extent of creative accounting. By defining creative accounting (section 2), a critical evaluation of measures (section 3) and the conclusion (section 4), this essay will show that the measures introduced by the ASB are powerful to contain present creative accounting. However, they will not prevent future creative accounting.

What people are saying - Write a review

We haven't found any reviews in the usual places.

Other editions - View all

Common terms and phrases

Popular passages

Page 2 - The funding or refinancing of a company's operations in such a way that, under legal requirements and existing accounting conventions, some or all of the finance may not be shown on its balance sheet.
Page 4 - In straightforward cases, eg where the only movement on shareholders' funds related to retained profit (1oss), a separate statement may not be necessary. (c) Reserve movements FRS 3 states that '. . . Gains and losses may be excluded from the profit and loss account only if they are specifically permitted or required to be taken directly to reserves by this or other accounting standards, or, in the absence of a relevant accounting standard, by law'.
Page 2 - ... true and fair view requirement become, in cases where it is applicable, a source of law in itself in the widest sense of that term. 8 This implies that a standard's acceptance strengthens its contribution to the "true and fair view".
Page 1 - The ASB The Accounting Standards Board (ASB) is the standard-setting body of generally accepted accounting principles in the UK.
Page 3 - Assets and liabilities placed into them must be accounted for 'in the same way as if they were those of a subsidiary

Bibliographic information