Ethics

Question 1

What are 3 creative accounting ethical threats?

Answer 1

●Loss of reputation of a business

●Loss of reputation for the accounting profession

●Tax reductions (business will need to pay tax that was previously evaded)

Question 2

What are 3 ethical behaviours companies can adopt to prevent unethical accounting practices?

Answer 2

●Employ assurance services (external auditors)
●Make rules to minimise the use of judgment
●Adhere to regulatory requirements

Question 3

What are 3 of the main methods of creative accounting?

Answer 3

●Misstating revenues
●Massaging expenses
●Concealing bad news