Corporate Collapse Case Study Part 2 Essay Example | Topics and Well Written Essays - 2000 words

Corporate Collapse Case Study fragment 2 - Essay ExampleIn USA this procedure is a part of burlesque history but in the UK it is dod to provide flexibility in the existing invoice and regulatory trunk of the party. The sole purpose of accounting is to provide a true and fair view to the users of the financial cultivation (Larson, 2008). Creative accounting does not necessarily mean the violation of GAAP rules or breaching of any scathe and condition of the company. The accountants generally use this concept to insert flexibility in the accounting system and turn out a true and fair view to the users of the financial report and information (Jones, 2011). Mark to Market accounting on the other hand is used for updating the value of an asset or a financial obligation to reflect the real market value of the asset/ liability (Wolnizer, 2003). This was mainly used for transaction associate to future exchange and recently it is been used by banks and other financial institutions . This method got official science in the year 2009 by FASB (Financial Accounting Standard Board). This method was used to prevent inappropriate use of financial value. Companies usually use this method for assets and liabilities but it is also used for future exchanges to meet the put on margin requirements. If the margin accounts are not monitored regularly then the current market value could unload drastically below the required levels. The process of internal audit adds significant value by preventing fraud accounting within the company and improving financial control. Audit failure leads to misappropriation of funds and non contracting of fraudulent activities within the company. Companies which rely on external source for internal auditing process are likely to detect less error than those who conduct the process themselves (Idowu and Caliyurt, 2012). Examples of failure in the accounting procedure hotshot of the most controversial accounting scandals was the Enron scand al in which Enron Corporation, a Houston based energy, service and commodities corporation filed for unsuccessful person in October 2001. The shareholders of the company lost $74 billion and thousand of employee lost their retirement accounts and jobs. The CEO of the company Jeff Skilling and former CEO Ken had not portrayed the huge debt amount in their balance sheet. In October 2000, the share price of the company skyrocketed to $90 per share and later in the November, 2000 the fund price dipped to $1(Bierman, 2008). The stock price of the company went down because Sherron Watkins, an employer of the company had raised suspicion about the high stock prices through the whistle blowing method. The CEO of the company and his accomplice was eventually caught and were termed for 24 years in prison house (Accounting Degree, 2013). This had tarnished the image of Enron Corporation completely and the management of the company who had sought plans for IPO (Initial Public Offering) for t he internet subdivision could not continue with the plans of IPO. Another similar incident which had sparked controversies in USA was popularly known as the World com Scandal. In the year 2000, the CEO of MCI Communications Mr. Bernie Ebbers became one of the wealthiest men in the people even amidst the financial crisis faced by the telecom