Accounting Coursework Example | Topics and Well Written Essays - 500 words

Accounting - Coursework Example Our analysis will cover the main factors that may encourage unethical accounting practices at the managerial level. Greed for money appears to be the most convenient explanation. Personal gain is probably why malpractice is performed in the first place. With accounting being a practice revolving entirely around money, greed is likely to strike at any level, whether it be an individual accountant or at a member of the executive board. Financial information is manipulated as managers and accounting specialists search for loopholes in standards either for misrepresentation or for direct monetary benefit. Pressure to meet profitability targets is another important factor as to why management may choose to enter the grey area of accounting. In certain scenarios meeting analysts’ expectations regarding company performance becomes more important than contractual obligations, as the company is reputed to adhere to its market predicted growth trends. Therefore, capital market pressure may just be significant enough for managers to resort to unethical means to financial reporting. (Serwer, et al., 2002) have construed in a similar context: â€Å"over time so much focus has been placed on levitating companies stock prices that many executives will do almost anything--legal or otherwise--to make it happen† (Rosen, Al, 2009) regards executive compensation as the key to the dubitable practice of misrepresentation in financial reporting. Executive compensation can occur either via share-based compensatory benefits (as share prices rise) or inflated profitability by over-stating revenues. Corporate culture plays a significant role in devising managerial ethics. If in order to achieve ‘company’ gains the executive management is known to practice manipulation with financial information, subordinate staff is likely to use unethical means for personal benefits too (StrategicDirection,