{"product_id":"creative-accounting-fraud-and-international-accounting-scandals-isbn-9780470057650","title":"Creative Accounting, Fraud and International Accounting Scandals","description":"Business scandals are always with us from the South Sea Bubble to Enron and Parmalat.  As accounting forms a central element of any business success or failure, the role of accounting is crucial in understanding business scandals. This book aims to explore the role of accounting, particularly creative accounting and fraud, in business scandals. The book is divided into three parts. In Part A the background and context of creative accounting and fraud is explored. Part  B looks at a series of international accounting scandals and Part  C draws some themes and implications from the country studies. \u003cp\u003eList of Contributors xvii\u003c\/p\u003e \u003cp\u003ePreface xxiii\u003c\/p\u003e \u003cp\u003eAcknowledgements xxv\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart A \u003c\/b\u003e\u003cb\u003e1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 Introduction – Setting the Scene 3\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e1.1 Introduction 3\u003c\/p\u003e \u003cp\u003e1.2 Exploring the Terms 4\u003c\/p\u003e \u003cp\u003e1.2.1 Creative Accounting 4\u003c\/p\u003e \u003cp\u003e1.2.2 Fraud 7\u003c\/p\u003e \u003cp\u003e1.2.3 Other Terms 9\u003c\/p\u003e \u003cp\u003e1.3 Structure of the Book 11\u003c\/p\u003e \u003cp\u003e1.3.1 Increase Income 12\u003c\/p\u003e \u003cp\u003e1.3.2 Decrease Expenses 12\u003c\/p\u003e \u003cp\u003e1.3.3 Increase Assets 12\u003c\/p\u003e \u003cp\u003e1.3.4 Decrease Liabilities 12\u003c\/p\u003e \u003cp\u003e1.4 Conclusion 18\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 The Creative Accounting and Fraud Environment 21\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e2.1 Introduction 21\u003c\/p\u003e \u003cp\u003e2.2 The Main Actors 22\u003c\/p\u003e \u003cp\u003e2.2.1 Managers 22\u003c\/p\u003e \u003cp\u003e2.2.2 Investment Analysts 24\u003c\/p\u003e \u003cp\u003e2.2.3 Regulators 24\u003c\/p\u003e \u003cp\u003e2.2.4 Auditors 25\u003c\/p\u003e \u003cp\u003e2.2.5 Shareholders 26\u003c\/p\u003e \u003cp\u003e2.2.6 Merchant Banks 26\u003c\/p\u003e \u003cp\u003e2.2.7 Other Users 27\u003c\/p\u003e \u003cp\u003e2.2.8 Legal Authorities 27\u003c\/p\u003e \u003cp\u003e2.3 Effective Corporate Governance 28\u003c\/p\u003e \u003cp\u003e2.3.1 Effective Internal Controls 28\u003c\/p\u003e \u003cp\u003e2.3.2 Division of the Responsibility between Chief Executive and Chairman 28\u003c\/p\u003e \u003cp\u003e2.3.3 Audit Committee 28\u003c\/p\u003e \u003cp\u003e2.3.4 Independent Board of Directors 28\u003c\/p\u003e \u003cp\u003e2.4 Economic Environment 28\u003c\/p\u003e \u003cp\u003e2.5 Conclusion 29\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Motivations to Indulge in Creative Accounting and Fraud 31\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e3.1 Introduction 31\u003c\/p\u003e \u003cp\u003e3.1.1 Personal Incentives 33\u003c\/p\u003e \u003cp\u003e3.1.2 Market Expectations 34\u003c\/p\u003e \u003cp\u003e3.1.3 Special Circumstances 36\u003c\/p\u003e \u003cp\u003e3.1.4 Cover-up Fraud 39\u003c\/p\u003e \u003cp\u003e3.2 Conclusion 39\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Methods of Creative Accounting and Fraud 43\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e4.1 Introduction 43\u003c\/p\u003e \u003cp\u003e4.2 Basic Principles 44\u003c\/p\u003e \u003cp\u003e4.3 Nature of Accounting 45\u003c\/p\u003e \u003cp\u003e4.4 Methods of Creative Accounting 45\u003c\/p\u003e \u003cp\u003e4.4.1 Strategy 1: Increase Income 46\u003c\/p\u003e \u003cp\u003e4.4.2 Strategy 2: Decrease Expenses 48\u003c\/p\u003e \u003cp\u003e4.4.3 Strategy 3: Increase Assets 56\u003c\/p\u003e \u003cp\u003e4.4.4 Strategy 4: Decrease Liabilities 58\u003c\/p\u003e \u003cp\u003e4.4.5 Strategy 5: Increase Operating Cash Flow 60\u003c\/p\u003e \u003cp\u003e4.5 Simple Numerical Example 61\u003c\/p\u003e \u003cp\u003e4.6 Fraud 62\u003c\/p\u003e \u003cp\u003e4.6.1 Misappropriation of Assets 64\u003c\/p\u003e \u003cp\u003e4.6.2 Fictitious Transactions 65\u003c\/p\u003e \u003cp\u003e4.7 Conclusion 67\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Evidence for Creative Accounting and Fraud 69\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e5.1 Introduction 69\u003c\/p\u003e \u003cp\u003e5.2 The Descriptive Studies 69\u003c\/p\u003e \u003cp\u003e5.2.1 Ian Grif ths, \u003ci\u003eCreative Accounting \u003c\/i\u003e(1986) 71\u003c\/p\u003e \u003cp\u003e5.2.2 County Natwest WoodMac, \u003ci\u003eCompany Pathology \u003c\/i\u003e(1991) 72\u003c\/p\u003e \u003cp\u003e5.2.3 UBS Phillips \u0026amp; Drew, \u003ci\u003eAccounting for Growth \u003c\/i\u003e(1991) 73\u003c\/p\u003e \u003cp\u003e5.2.4 Trevor Pijper, \u003ci\u003eCreative Accounting \u003c\/i\u003e(1993) 76\u003c\/p\u003e \u003cp\u003e5.2.5 Frank Clarke, Graeme Dean and Kyle Oliver, \u003ci\u003eCorporate Collapse: Accounting, Regulatory and Ethical Failure \u003c\/i\u003e(2003, rst issued 1997) 77\u003c\/p\u003e \u003cp\u003e5.2.6 Frank Clarke and Graeme Dean, \u003ci\u003eIndecent Disclosure: Gilding the \u003c\/i\u003e\u003ci\u003eCorporate Lily \u003c\/i\u003e(2007) 78\u003c\/p\u003e \u003cp\u003e5.2.7 McBarnet and Whelan, \u003ci\u003eCreative Accounting and the Cross-eyed \u003c\/i\u003e\u003ci\u003eJavelin Thrower \u003c\/i\u003e(1999) 78\u003c\/p\u003e \u003cp\u003e5.2.8 Charles Mulford and Eugene Comiskey, \u003ci\u003eThe Financial Numbers \u003c\/i\u003e\u003ci\u003eGame \u003c\/i\u003e(2002) 79\u003c\/p\u003e \u003cp\u003e5.2.9 Beasley, Carcello and Hermanson, \u003ci\u003eFraudulent Financial Reporting \u003c\/i\u003e\u003ci\u003e1987–1997: An Analysis of U.S. Public Companies \u003c\/i\u003e(1999) 81\u003c\/p\u003e \u003cp\u003e5.2.10 Joseph Wells, \u003ci\u003ePrinciples of Fraud Examination \u003c\/i\u003e(2005) 82\u003c\/p\u003e \u003cp\u003e5.3 The Statistical Studies 84\u003c\/p\u003e \u003cp\u003e5.3.1 Earnings Management Studies 84\u003c\/p\u003e \u003cp\u003e5.4 Conclusion 93\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Impression Management 97\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e6.1 Introduction 97\u003c\/p\u003e \u003cp\u003e6.1.1 Accounting Narratives 97\u003c\/p\u003e \u003cp\u003e6.1.2 Graphs 102\u003c\/p\u003e \u003cp\u003e6.2 Conclusion 111\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Taking the Long View: Accounting Scandals over Time 115\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e7.1 Introduction 115\u003c\/p\u003e \u003cp\u003e7.1.1 Ancient and Medieval 117\u003c\/p\u003e \u003cp\u003e7.1.2 Seventeenth and Eighteenth Centuries 118\u003c\/p\u003e \u003cp\u003e7.1.3 Nineteenth Century 119\u003c\/p\u003e \u003cp\u003e7.1.4 Twentieth Century: Before Second World War 122\u003c\/p\u003e \u003cp\u003e7.1.5 Twentieth Century: 1945–1980s 127\u003c\/p\u003e \u003cp\u003e7.2 Conclusion 132\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart B \u003c\/b\u003e\u003cb\u003e135\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Accounting Scandals in Australia since the Late 1980s 137\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eGarry D. Carnegie and Brendan T. O’Connell\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e8.1 Introduction 137\u003c\/p\u003e \u003cp\u003e8.2 Overview of Accounting Scandals during and since the 1890s 138\u003c\/p\u003e \u003cp\u003e8.3 Case Studies of Accounting Scandals since the Late 1980s 141\u003c\/p\u003e \u003cp\u003e8.3.1 Adelaide Steamship 142\u003c\/p\u003e \u003cp\u003e8.3.2 Bond Corporation 143\u003c\/p\u003e \u003cp\u003e8.3.3 Harris Scarfe 145\u003c\/p\u003e \u003cp\u003e8.3.4 One.Tel 146\u003c\/p\u003e \u003cp\u003e8.4 HIH Insurance 147\u003c\/p\u003e \u003cp\u003e8.4.1 Background 148\u003c\/p\u003e \u003cp\u003e8.4.2 Why did HIH Collapse? 149\u003c\/p\u003e \u003cp\u003e8.4.3 Accounting Issues 150\u003c\/p\u003e \u003cp\u003e8.4.4 Legal Outcomes Arising from the HIH Collapse 152\u003c\/p\u003e \u003cp\u003e8.5 Corporate Governance Reforms Following the Accounting Scandals of the Early 2000s 155\u003c\/p\u003e \u003cp\u003e8.6 Conclusion 156\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Corporate Accounting Scandals in China 163\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eCatherine Huirong Chen, Yuanyuan Hu and Jason Zezhong Xiao\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e9.1 Introduction 163\u003c\/p\u003e \u003cp\u003e9.2 Summary of Corporate Scandals 164\u003c\/p\u003e \u003cp\u003e9.2.1 Shenzhen Yuanye 164\u003c\/p\u003e \u003cp\u003e9.2.2 Great Wall Fund Raising 166\u003c\/p\u003e \u003cp\u003e9.2.3 Hongguang 167\u003c\/p\u003e \u003cp\u003e9.2.4 Daqing Lianyi 168\u003c\/p\u003e \u003cp\u003e9.2.5 Kangsai Group 169\u003c\/p\u003e \u003cp\u003e9.2.6 Lantian Gufen 170\u003c\/p\u003e \u003cp\u003e9.3 A Case in Depth – Zhengzhou Baiwen 172\u003c\/p\u003e \u003cp\u003e9.3.1 Background 172\u003c\/p\u003e \u003cp\u003e9.3.2 Themes of the Scandal 174\u003c\/p\u003e \u003cp\u003e9.3.3 Who is to Blame? 176\u003c\/p\u003e \u003cp\u003e9.3.4 Consequences of the Baiwen Scandal 178\u003c\/p\u003e \u003cp\u003e9.3.5 Aftermath 179\u003c\/p\u003e \u003cp\u003e9.4 Conclusion 180\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Accounting Scandals in Germany 185\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eHansrudi Lenz\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e10.1 Introduction 185\u003c\/p\u003e \u003cp\u003e10.2 Accounting Scandals Between 1985 and 2006 186\u003c\/p\u003e \u003cp\u003e10.2.1 Co op AG (1988) 186\u003c\/p\u003e \u003cp\u003e10.2.2 Balsam AG (1994) 187\u003c\/p\u003e \u003cp\u003e10.2.3 Bremer Vulkan Verbund AG (1995) 189\u003c\/p\u003e \u003cp\u003e10.2.4 Philipp Holzmann AG (1999) 191\u003c\/p\u003e \u003cp\u003e10.3 Most Important Cases: Flowtex and Comroad 193\u003c\/p\u003e \u003cp\u003e10.3.1 Flowtex Gmbh \u0026amp; Co. KG (2000) 193\u003c\/p\u003e \u003cp\u003e10.3.2 ComRoad AG (2001) 195\u003c\/p\u003e \u003cp\u003e10.4 Accounting Scandals and Regulatory Responses 200\u003c\/p\u003e \u003cp\u003e10.5 Examinations of the German Financial Reporting Enforcement Panel 2005–2006 202\u003c\/p\u003e \u003cp\u003e10.6 Conclusion 208\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Creative Accounting and Fraud in Greece 211\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eGeorge Kontos, Maria Krambia-Kapardis and Nikolaos Milonas\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e11.1 Introduction 211\u003c\/p\u003e \u003cp\u003e11.2 Two Accounting Scandals 213\u003c\/p\u003e \u003cp\u003e11.2.1 ETBA Finance 213\u003c\/p\u003e \u003cp\u003e11.2.2 Dynamic Life 217\u003c\/p\u003e \u003cp\u003e11.3 The Bank of Crete Scandal 220\u003c\/p\u003e \u003cp\u003e11.3.1 Koskotas’s Employment with the Bank of Crete 221\u003c\/p\u003e \u003cp\u003e11.3.2 The Accounting Information Systems of the Time 223\u003c\/p\u003e \u003cp\u003e11.3.3 The Economic Environment at that Time 225\u003c\/p\u003e \u003cp\u003e11.4 The Aftermath 229\u003c\/p\u003e \u003cp\u003e11.5 Conclusions 231\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Corporate Creative Accounting in India: Extent and Consequences 233\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eBhabatosh Banerjee\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e12.1 Introduction 233\u003c\/p\u003e \u003cp\u003e12.2 Some Examples of Creative Accounting in India 234\u003c\/p\u003e \u003cp\u003e12.3 Some Important Corporate Cases in India 239\u003c\/p\u003e \u003cp\u003e12.4 The Satyam Computer Services Ltd Scandal (2009) 240\u003c\/p\u003e \u003cp\u003e12.4.1 Background 240\u003c\/p\u003e \u003cp\u003e12.4.2 Satyam: A Global Organisation 240\u003c\/p\u003e \u003cp\u003e12.4.3 Alleged Possible Processes and their Impact 241\u003c\/p\u003e \u003cp\u003e12.4.4 Good Guy, Bad Choices 243\u003c\/p\u003e \u003cp\u003e12.4.5 Role of the Auditors 243\u003c\/p\u003e \u003cp\u003e12.4.6 Institution of Legal Proceedings 245\u003c\/p\u003e \u003cp\u003e12.4.7 Salvaging Satyam 245\u003c\/p\u003e \u003cp\u003e12.4.8 Rebuilding the Corporate Image 246\u003c\/p\u003e \u003cp\u003e12.4.9 Some Antidotes 247\u003c\/p\u003e \u003cp\u003e12.5 Aftermath 247\u003c\/p\u003e \u003cp\u003e12.5.1 Changes in the Companies Act 247\u003c\/p\u003e \u003cp\u003e12.5.2 Measures Taken by the SEBI 248\u003c\/p\u003e \u003cp\u003e12.5.3 Prudential Norms of the RBI 249\u003c\/p\u003e \u003cp\u003e12.6 Conclusion 250\u003c\/p\u003e \u003cp\u003e12.7 Acknowledgements 251\u003c\/p\u003e \u003cp\u003e\u003cb\u003e13 Creative Accounting and Accounting Scandals in Italy 253\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eAndrea Melis\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e13.1 Introduction 253\u003c\/p\u003e \u003cp\u003e13.2 Creative Accounting Practices in Italy: A Case Study Analysis 255\u003c\/p\u003e \u003cp\u003e13.2.1 The Choice of Consolidation Technique 255\u003c\/p\u003e \u003cp\u003e13.2.2 The Accounting of Stock Options 256\u003c\/p\u003e \u003cp\u003e13.2.3 The Accounting of ‘Creative Gains’ in Football Club Companies 257\u003c\/p\u003e \u003cp\u003e13.3 The Most Important Accounting Fraud in Italy: The Parmalat Case 259\u003c\/p\u003e \u003cp\u003e13.3.1 Parmalat: Was it a Case of Creative Accounting or of False Accounting? 260\u003c\/p\u003e \u003cp\u003e13.3.2 Key Accounting Issues at Parmalat: Some Examples of the Accounting Fraud 261\u003c\/p\u003e \u003cp\u003e13.3.3 The Role of Corporate Governance Actors 265\u003c\/p\u003e \u003cp\u003e13.3.4 The Role of Information Demand-side Actors: Institutional Investors, Financial Analysts and Banks 271\u003c\/p\u003e \u003cp\u003e13.4 The Aftermath of the Parmalat Scandal and its Impact on Business and Society 272\u003c\/p\u003e \u003cp\u003e13.5 Conclusion 274\u003c\/p\u003e \u003cp\u003e\u003cb\u003e14 Creative Accounting and Accounting Scandals in Japan 279\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eKazuyuki Suda\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e14.1 Introduction 279\u003c\/p\u003e \u003cp\u003e14.2 Accounting Regulations and Standards in Japan 280\u003c\/p\u003e \u003cp\u003e14.2.1 Accounting Regulations 280\u003c\/p\u003e \u003cp\u003e14.2.2 Accounting Standards 280\u003c\/p\u003e \u003cp\u003e14.3 Short History of Accounting Scandals Before the 1980s 281\u003c\/p\u003e \u003cp\u003e14.4 Three Types of Accounting Scandal Post-1980s 283\u003c\/p\u003e \u003cp\u003e14.4.1 Accounting Scandal to Maintain High Share Prices 285\u003c\/p\u003e \u003cp\u003e14.4.2 Accounting Scandal Related to Contracts 289\u003c\/p\u003e \u003cp\u003e14.4.3 Accounting Scandal to Avoid Bankruptcy 292\u003c\/p\u003e \u003cp\u003e14.5 Consequences of the Accounting Scandals 296\u003c\/p\u003e \u003cp\u003e14.5.1 Revision of Accounting Standards for Consolidated Financial Statements 296\u003c\/p\u003e \u003cp\u003e14.5.2 Reorganization of Audit Firms 296\u003c\/p\u003e \u003cp\u003e14.5.3 Establishing Internal Control Systems 297\u003c\/p\u003e \u003cp\u003e14.6 Conclusion 298\u003c\/p\u003e \u003cp\u003e\u003cb\u003e15 Financial Accounting Scandals in the Netherlands 305\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eHenk Langendijk\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e15.1 Introduction 305\u003c\/p\u003e \u003cp\u003e15.2 Some Minor Accounting Scandals 307\u003c\/p\u003e \u003cp\u003e15.2.1 Creative Accounting at Rijn-Schelde-Verolme (RSV) 307\u003c\/p\u003e \u003cp\u003e15.2.2 Creative Accounting at Fokker 309\u003c\/p\u003e \u003cp\u003e15.3 Royal Ahold 310\u003c\/p\u003e \u003cp\u003e15.3.1 Consolidation of Joint Ventures at Royal Ahold 310\u003c\/p\u003e \u003cp\u003e15.3.2 Consolidation Accounting in the Netherlands 311\u003c\/p\u003e \u003cp\u003e15.3.3 Consolidation Accounting under US GAAP 311\u003c\/p\u003e \u003cp\u003e15.3.4 The Control and Side Letters 312\u003c\/p\u003e \u003cp\u003e15.3.5 Accounting for Vendor Allowances at US Foodservice (USF) 315\u003c\/p\u003e \u003cp\u003e15.3.6 Proper Accounting Treatment Vendor Allowances 315\u003c\/p\u003e \u003cp\u003e15.3.7 Measures Taken by Royal Ahold after Discovering the Fraud 318\u003c\/p\u003e \u003cp\u003e15.3.8 Acquisition Accounting 319\u003c\/p\u003e \u003cp\u003e15.3.9 Reserves, Allowances and Provisions 320\u003c\/p\u003e \u003cp\u003e15.3.10 Lease Accounting 320\u003c\/p\u003e \u003cp\u003e15.4 Conclusion 320\u003c\/p\u003e \u003cp\u003e\u003cb\u003e16 Creative Accounting and Financial Scandals in Spain 325\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eNieves Carrera\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e16.1 Introduction 325\u003c\/p\u003e \u003cp\u003e16.2 Accounting Scandals in Spain Since the 1980s 326\u003c\/p\u003e \u003cp\u003e16.2.1 The Banking Sector 327\u003c\/p\u003e \u003cp\u003e16.2.2 Investment Service Firms 330\u003c\/p\u003e \u003cp\u003e16.2.3 The Real Estate Sector: The Case of PSV and IGS 332\u003c\/p\u003e \u003cp\u003e16.3 Investments in Stamps: The Latest Series of Financial Scandals in the Country. Afinsa and Fórum Filatélico 333\u003c\/p\u003e \u003cp\u003e16.3.1 Background of the Cases of Afinsa and Fórum Filatélico 334\u003c\/p\u003e \u003cp\u003e16.3.2 The Nature of the Businesses and the Accounting for Investment Contracts 335\u003c\/p\u003e \u003cp\u003e16.3.3 The Suppliers 337\u003c\/p\u003e \u003cp\u003e16.3.4 Valuation of Stamps 339\u003c\/p\u003e \u003cp\u003e16.3.5 Reflections on the Scandal 340\u003c\/p\u003e \u003cp\u003e16.3.6 Where were the Auditors? 341\u003c\/p\u003e \u003cp\u003e16.3.7 Was it a Surprise? 341\u003c\/p\u003e \u003cp\u003e16.3.8 Consequences of the Scandal 343\u003c\/p\u003e \u003cp\u003e16.4 The Aftermath of the Scandals 344\u003c\/p\u003e \u003cp\u003e16.5 Conclusion 346\u003c\/p\u003e \u003cp\u003e\u003cb\u003e17 Accounting Scandals in Sweden – A Long Tradition 359\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eGunnar Rimmel and Kristina \u003ci\u003eJonäll\u003c\/i\u003e\u003cbr\u003e\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e17.1 Introduction 359\u003c\/p\u003e \u003cp\u003e17.2 Fermenta and Prosolvia: Swedish Stock Market Darlings 360\u003c\/p\u003e \u003cp\u003e17.2.1 Fermenta – 1980s Biotech Company’s Accounting Errors 360\u003c\/p\u003e \u003cp\u003e17.2.2 Prosolvia – 1990s Experts in Simulating Virtual Reality? 363\u003c\/p\u003e \u003cp\u003e17.2.3 Reconstruction of Ownership 364\u003c\/p\u003e \u003cp\u003e17.2.4 Fictitious Invoices, Invented Agreements and Premature Income Recognition 364\u003c\/p\u003e \u003cp\u003e17.2.5 Insider Trading 365\u003c\/p\u003e \u003cp\u003e17.3 Two Scandals in Multinationals that Dominated the Swedish Media 365\u003c\/p\u003e \u003cp\u003e17.3.1 ABB – Shaken and Stirred 365\u003c\/p\u003e \u003cp\u003e17.3.2 Skandia – A Shooting Star Turns into a White Dwarf 368\u003c\/p\u003e \u003cp\u003e17.4 Conclusions 373\u003c\/p\u003e \u003cp\u003e\u003cb\u003e18 Creative Accounting – The UK Experience 379\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eDavid Gwilliam and Richard H.G. Jackson\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e18.1 Introduction 379\u003c\/p\u003e \u003cp\u003e18.2 Historical Background 381\u003c\/p\u003e \u003cp\u003e18.3 Some Recent Accounting Scandals 382\u003c\/p\u003e \u003cp\u003e18.3.1 Bank of Credit and Commerce International (BCCI) 383\u003c\/p\u003e \u003cp\u003e18.3.2 The Mirror Group 385\u003c\/p\u003e \u003cp\u003e18.4 Polly Peck 386\u003c\/p\u003e \u003cp\u003e18.4.1 Meyna 389\u003c\/p\u003e \u003cp\u003e18.4.2 Vestel 390\u003c\/p\u003e \u003cp\u003e18.4.3 Unipac 390\u003c\/p\u003e \u003cp\u003e18.4.4 Accounting Policies at Polly Peck 391\u003c\/p\u003e \u003cp\u003e18.5 The Immediate Aftermath 398\u003c\/p\u003e \u003cp\u003e18.5.1 Accounting Regulatory Change 398\u003c\/p\u003e \u003cp\u003e18.5.2 Governance and Enforcement 400\u003c\/p\u003e \u003cp\u003e18.6 Subsequent Developments 400\u003c\/p\u003e \u003cp\u003e18.7 Conclusions 402\u003c\/p\u003e \u003cp\u003e18.8 Acknowledgements 404\u003c\/p\u003e \u003cp\u003e\u003cb\u003e19 Creative Accounting and Accounting Scandals in the USA 407\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eCharles W. Mulford and Eugene E. Comiskey\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e19.1 Introduction 407\u003c\/p\u003e \u003cp\u003e19.2 Scandals since the 1990s 410\u003c\/p\u003e \u003cp\u003e19.2.1 Premature or Fictitious Revenue Recognition 410\u003c\/p\u003e \u003cp\u003e19.2.2 Capitalized Costs and\/or Extended Amortization Periods 412\u003c\/p\u003e \u003cp\u003e19.2.3 Overstated Assets and\/or Understated Liabilities 416\u003c\/p\u003e \u003cp\u003e19.2.4 Other Creative Accounting Practices 416\u003c\/p\u003e \u003cp\u003e19.3 Enron and Worldcom 419\u003c\/p\u003e \u003cp\u003e19.3.1 Enron Corp. 419\u003c\/p\u003e \u003cp\u003e19.3.2 WorldCom, Inc. 421\u003c\/p\u003e \u003cp\u003e19.4 Aftermath of the Scandals 423\u003c\/p\u003e \u003cp\u003e\u003cb\u003e20 Bank Failures and Accounting During the Financial Crisis of 2008–2009 425\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eSimon D. Norton\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e20.1 Introduction 425\u003c\/p\u003e \u003cp\u003e20.2 428\u003c\/p\u003e \u003cp\u003e20.2.1 Kaupthing Bank 428\u003c\/p\u003e \u003cp\u003e20.2.2 Northern Rock 429\u003c\/p\u003e \u003cp\u003e20.3 Origins of the ‘Credit Crunch’ 430\u003c\/p\u003e \u003cp\u003e20.3.1 Sub-prime Lending 430\u003c\/p\u003e \u003cp\u003e20.3.2 Types of Mortgage 432\u003c\/p\u003e \u003cp\u003e20.3.3 Economic Downturn and Rising Unemployment 432\u003c\/p\u003e \u003cp\u003e20.4 Financial Instruments Associated with the Credit Crunch 432\u003c\/p\u003e \u003cp\u003e20.4.1 Collateralised Debt Obligations (CDOs) 433\u003c\/p\u003e \u003cp\u003e20.4.2 Credit Default Swaps (CDS) 433\u003c\/p\u003e \u003cp\u003e20.4.3 Collateralised Mortgage Obligations (CMOs) 434\u003c\/p\u003e \u003cp\u003e20.4.4 Securitisation and Off-balance Sheet Financing 434\u003c\/p\u003e \u003cp\u003e20.4.5 Repurchase agreements or ‘repos’ 436\u003c\/p\u003e \u003cp\u003e20.5 Creative Accounting in the Banking Sector 437\u003c\/p\u003e \u003cp\u003e20.5.1 Loan-loss Allowances 437\u003c\/p\u003e \u003cp\u003e20.5.2 Adjustment of Reporting Dates 437\u003c\/p\u003e \u003cp\u003e20.5.3 Enhancing Pro ts through Disposals of Assets 438\u003c\/p\u003e \u003cp\u003e20.5.4 Lawful Adjustments to Composition of ‘Level 3’ Assets in Banks’ Balance Sheets 438\u003c\/p\u003e \u003cp\u003e20.5.5 Decline in Value of Outstanding Debt 439\u003c\/p\u003e \u003cp\u003e20.6 Lehman’s, Madoff and Bear Stearns; Failures and Consequences 440\u003c\/p\u003e \u003cp\u003e20.6.1 Lehman Brothers 440\u003c\/p\u003e \u003cp\u003e20.6.2 Bernard Madoff 445\u003c\/p\u003e \u003cp\u003e20.6.3 Bear Stearns 448\u003c\/p\u003e \u003cp\u003e20.7 Conclusion 450\u003c\/p\u003e \u003cp\u003e\u003cb\u003ePart C \u003c\/b\u003e\u003cb\u003e453\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e21 Identifying Some Themes 455\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e21.1 Introduction 455\u003c\/p\u003e \u003cp\u003e21.2 Some Themes 455\u003c\/p\u003e \u003cp\u003e21.2.1 Background 455\u003c\/p\u003e \u003cp\u003e21.2.2 Creative Accounting or Fraud 459\u003c\/p\u003e \u003cp\u003e21.3 The Major Methods Used 460\u003c\/p\u003e \u003cp\u003e21.3.1 Strategy 1: Increasing Income 461\u003c\/p\u003e \u003cp\u003e21.3.2 Strategy 2: Decreasing Expenses 462\u003c\/p\u003e \u003cp\u003e21.3.3 Strategy 3: Increasing Assets 464\u003c\/p\u003e \u003cp\u003e21.3.4 Strategy 4: Decreasing Liabilities 465\u003c\/p\u003e \u003cp\u003e21.3.5 Other Methods of Creative Accounting 466\u003c\/p\u003e \u003cp\u003e21.4 Methods of Fraud 467\u003c\/p\u003e \u003cp\u003e21.5 Incentives for Creative Accounting and Fraud 471\u003c\/p\u003e \u003cp\u003e21.6 Overstrong Personalities 473\u003c\/p\u003e \u003cp\u003e21.7 Failure of Internal Controls 474\u003c\/p\u003e \u003cp\u003e21.8 Failure of External Auditors 475\u003c\/p\u003e \u003cp\u003e21.9 Conclusion 477\u003c\/p\u003e \u003cp\u003e\u003cb\u003e22 The Impact of Accounting Scandals and Creative Accounting 479\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e22.1 Introduction 479\u003c\/p\u003e \u003cp\u003e22.2 Short-term Immediate Effects 479\u003c\/p\u003e \u003cp\u003e22.2.1 Insiders 480\u003c\/p\u003e \u003cp\u003e22.2.2 Outsiders 481\u003c\/p\u003e \u003cp\u003e22.3 Long-term Effects 484\u003c\/p\u003e \u003cp\u003e22.3.1 One-off Regulatory Responses 484\u003c\/p\u003e \u003cp\u003e22.4 Cumulative Effects 487\u003c\/p\u003e \u003cp\u003e22.5 Conclusion 490\u003c\/p\u003e \u003cp\u003e\u003cb\u003e23 Conclusion – Looking Backwards and Forwards 493\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eMichael Jones\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e23.1 Overview 493\u003c\/p\u003e \u003cp\u003e23.2 Thematic Analysis 496\u003c\/p\u003e \u003cp\u003e23.3 Lessons for the Future 499\u003c\/p\u003e \u003cp\u003e23.3.1 Factors Increasing the Possibilities of Creative Accounting and Fraud 499\u003c\/p\u003e \u003cp\u003e23.3.2 Factors Reducing the Potential for Creative Accounting and Fraud 501\u003c\/p\u003e \u003cp\u003e23.4 Prognosis 505\u003c\/p\u003e \u003cp\u003e23.5 Conclusion 506\u003c\/p\u003e \u003cp\u003eAppendix 1 Chronological List of Major Instances of Accounting Issues Across 12 Countries and Beyond 509\u003c\/p\u003e \u003cp\u003eAppendix 2 Alphabetical List of Most Important Accounting Scandals Across 12 Countries and Beyond since about 1980 519\u003c\/p\u003e \u003cp\u003eIndex 535\u003c\/p\u003e  \"AS A JOURNALIST I must confess I don't usually read the accounting books that drop onto my desk on a weekly basis but Michael Jones' hefty tome - Creative Accounting, Fraud and International Accounting Scandals - is different. Indeed, it is a rare thing in this sector, a real page turner.\" (\u003ci\u003eAccountancy Age,\u003c\/i\u003e November 2010)\u003cbr\u003e \u003cbr\u003e  \u003cp\u003e\u003cb\u003e\u003ci\u003eMichael Jones, MA Oxon,\u003c\/i\u003e\u003c\/b\u003e is Professor of Financial Reporting at Bristol University. He has taught accounting for 33 years at all levels from GCSE to final-year degree course, and has published over 140 articles in professional and academic journals, covering a wide range of topics including financial accounting, the history of accounting and international accounting.  \u003c\/p\u003e\u003cp\u003eHe is joint editor of the British Accounting Review and serves on two more editorial boards. He is Director of the Financial Reporting and Business Communication Unit and he chairs the British Accounting Association Financial and Reporting Special Interest Group. He has served on the British Accounting Association Committee and on the Committee for Professors of Accounting and Finance. He is also the author of three textbooks: \u003ci\u003eAccounting\u003c\/i\u003e, \u003ci\u003eFinancial Accounting\u003c\/i\u003e and \u003ci\u003eManagement Accounting\u003c\/i\u003e.   \u003c\/p\u003e\u003cp\u003e\u003ci\u003e\"Flexibility, exploiting loopholes, or deliberate fraud? Mike Jones provides a thorough and understandable pedagogic framework of explanation based on case studies and informed by research. Drawing on international expertise from colleagues he brings out lessons to be learned from case studies, including the most recent global financial crisis. The central story is based on greed and a belief in not being found out, facilitated by accounting devices of overstated income, omitted expenses, fictitious assets and hidden liabilities.\"\u003c\/i\u003e \u003cb\u003ePauline Weetman\u003c\/b\u003e, Professor of Accounting, University of Edinburgh Business School \u003c\/p\u003e\u003cp\u003e\u003ci\u003e\"As with many things, 'the devil is in the detail'. This is particularly so in the case of creative and fraudulent accounting, and Jones and his contributors provide the necessary detail by a careful selection of instructive cases. They are also clear about the fraudsters' objectives, the regulatory framework and provide the necessary historical context as to how the current 'state of the art' has derived and, because of this, why it may be different across countries. The result is not only a particularly useful but interesting examination of an important subject.\"\u003c\/i\u003e \u003cb\u003ePaul Barnes\u003c\/b\u003e, Professor of Fraud Risk Management and Director of the International Fraud Prevention Research Centre at Nottingham Trent University   \u003c\/p\u003e\u003cp\u003eFrom the South Sea Bubble to Enron and Parmalat, business scandals have a long and varied history which continues into the present day. As accounting is central to the success or failure of any business, so creative accounting has always played a key role in these scandals, reflecting the extremes of how numbers can be manipulated to deceive or even defraud. \u003c\/p\u003e\u003cp\u003e\u003ci\u003eCreative Accounting, Fraud and International Accounting Scandals\u003c\/i\u003e explores the role of accounting, particularly creative accounting and fraud in business scandals from around the world. It features a collection of 13 chapters by international authors, which detail accounting fraud and scandals in both developed and developing economies including Australia, China, Germany, Greece, India, Italy, Japan, the Netherlands, Spain, Sweden the UK and US. \u003c\/p\u003e\u003cp\u003eTo enhance the international perspective even further, a series of case studies, contributed by accounting experts, is also included. \u003c\/p\u003e\u003cp\u003eThis unique, global perspective on accounting scandals provides the background for discussion on the role of powerful individuals, the motives and methods of management who are complicit in these scandals and the failures of internal control and external auditing, as well as the long term impact of business scandals on the regulatory environment. \u003c\/p\u003e\u003cp\u003eOne of the few books on this subject, its accessible treatment of this relevant topic is fascinating reading for a wide audience. It also provides a highly useful reference for professional accountants and business people worldwide and students taking courses in forensic accounting and fraud, as well as providing more general background for most accounting courses.\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47989002404069,"sku":"NP9780470057650","price":102.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9780470057650.jpg?v=1761782387","url":"https:\/\/k12savings.com\/es\/products\/creative-accounting-fraud-and-international-accounting-scandals-isbn-9780470057650","provider":"K12savings","version":"1.0","type":"link"}