Accounts Manipulation Essay Example | Topics and Well Written Essays - 2250 words

Accounts Manipulation - Essay Example It is a rosier picture that what it actually is. Window-dressing is accomplished in general ways - by not making adequate provisions though prudence would require them for expenses and potential losses, by taking into account income even before its actual accrual, by playing around with inter-corporate adjustments etc."Security analysts earn their money basically in part, by advising investors of both private and institutional organizations on how to invest their funds. They may judge some companies to have good future prospects which are not fully reflected in the company's share price; therefore, their recommendation will be to buy the company's shares. Alternatively, they may judge other companies to have poor future prospects which are not reflected in their share prices; therefore, their recommendation will be to sell the company's shares. While security analysts carry out their own independent research into companies they can come to different conclusions about a company's futu re prospects. However, in most cases there tends to be a reasonable degree of consensus in these forecasts (simon, 1998)"."The primary purpose of financial statements is to show the underlying economic performance of a company. The balance sheet provides a snapshot of the assets, liabilities and capital of the business; and the income statement, or profit-and-loss account, shows the difference between total revenues and total expenses. The auditors analyze and assure that these present a fair view, acknowledging the subjective nature of some of the measures behind the accounts (Economist.com, 2002)". Financial statements are prepared for the purpose of presenting a periodical review or report on progress by management and deal with the status of investment in the new business and the results achieved during the period under review. They reflect a combination of recorded facts, accounting conventions and personal judgements, and the judgements and conventions applied affect them materially. The soundness of the judgement necessarily depends on the competence and integrity of those who make them and on their adherence to the Generally Accepted Accounting Principles and Conventions. Since each use of accounts may have a different focus in viewing the financial statement, it is necessary that the accounting statements are not biased in favour of anyone interested group. It is therefore, necessary for an accountant to ensure that the accounts represent a "true and fair" picture of the affairs of business. It may be often difficult to draw a clear line between true and untrue, and fair and unfair accounts; yet if the accountant prepares the financial statements free from any bias in favour of any user group and remains faithful to his self - conscience, chances are that the accounts thus prepared will be true and fair. As accou7ntants are human and prone to errors there would be the probability that the accounts presented are indeed less than true and fair. A reader of accounts must therefore, develop sufficient capability to see through such accounts or read between the lines to offset the biased presentation of accounts. The case of WorldCom The concept of evolution of WorldCom as a company happened in the year 1983 in Mississippi. The person behind this evolution is Bill Fields. He named the company as Long Distance Discount Services (LDDS). After some years the company was renamed as WorldCom. Since then the company grew step by step and transformed itself as a giant in the telecommunication world. The company is famous for its acquisitions of a number of small companies. The company landed in stage where no further large scale acquisitions were allowed by the