acc562 week 4 discussion 1

acc562 week 4 discussion 1 - by changing accounting...

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Is it ethical for a CPA or CPA firm to help companies “manage” their reported earnings and financial condition? Choose a position and develop an argument. It is unethical for a CPA or CPA firm to help companies “manage” their reported earnings and financial condition. Accurate and reliable reporting is the basis of corporate credibility today so the external users can rely on them for making business and economic decisions that is used for analysis and decision-making . A CPA or CPA firm has been granted a right to assure the true and fair financial information to external users, such as stakeholders, creditors and investing public. External users rely on financial statement, assuming that current reported earnings indicate long-term profitability. Where management does not try to manipulate earnings , the earnings data is more reliable because management is not influencing or manipulating earnings
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Unformatted text preview: by changing accounting methods, recognizing one-time items, or deferring expenses or accelerating revenues to bring about desired short-term earnings results. On the contrary, when earnings are managed so that financial statements do not reflect the economic health of the company accurately, External users may make improper decisions they otherwise would not have made. Because of its distorting effects, the public interest is impaired. Thus, helping clients manage their reported earning and financial condition can be labeled as an ethical behavior for a CPA or CPA firm. Akers, M., Bellovary, J., & Giancomino, D., (2007), Earnings Management and Its Implications: Educating the accounting profession. Retrieved from www.nysscpa.org/cpajournal/2007/807/ essentials/p64.htm...
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