Case: Tread Lightly through These Accounting Minefields (critical essay)
Read the Tread Lightly through These Accounting Minefields case study. This case addresses the different ways that companies choose to deal with the pressure created by an ever-changing economic climate. For example, managers are pressured to report sales growth figures that meet investor expectations, which can result in companies issuing misleading, and even fraudulent, financial reports. The case identifies six “minefields” where accounting abuse can take place: revenue measurement and recognition, provisions and reserves for uncertain future events or costs, asset valuation (and overvaluation), derivatives, related-party transactions, and information used for benchmarking performance.
The case includes questions at the end of each accounting minefield section. Write a 5- to 6-page paper that addresses how these questions relate to the case. Include suggestions for what can be done to minimize the impacts of such activities on the financial statements (the impact is always there, but we attempt as auditors, whether internal or external, to reduce the effect to an Immaterial level).
Include a description of your approach to the issues and your solutions to the problems described in the case.
Your paper should meet the following requirements:
5 to 6 pages in length, not including title and reference pages
Formatted according to the CSU-Global Guide to Writing and APA Requirements
Include at least 3 credible outside reference sources
Reference for this Critical Thinking Assignment:
Sherman, H.D., & Young, S.D. (2001). Tread lightly through these accounting minefields. Harvard Business Review, 79(7), 129-135.