Accounting Process in Organisation Analysis

Running Head : ACCOUNTING SCANDALS
ACCOUNTING SCANDALS
Name of the Student
Name of the University
Author Note

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ACCOUNTING SCANDALS
Introduction
Accounting principles is the guidelines that helps the auditors to properly implement
the accounting process in an organisation. The first part of paper has discussed on the
accounting scandals of the early 2000 and the next section has discussed on the importance of
GAAP accounting standards. The intense of this paper is to find the reason behind accounting
scandals that occurred during 2000s.
Accounting Scandals in the early 2000s
The main reason for accounting scandals during early 2000s is due to changing
professions of auditing and their role in accounting process. During the early 2000s, The
Enron Scandal was the biggest scandal that occurred. Arthur Andersen was the internal and
external auditor of Enron. During the internal control of the business, Arthur and the other
auditors had to attest their own figure (Kizil and Kasbasi2018). This caused huge doubts to
the accounting profession. Arthur has to go to various criminal charges in the year 2002.
During 2000, Enron was reported in practicing earning management techniques for doing the
adjustments. They had to go for many losses. Various investors were facing difficulties in
gaining the market capitalization, due to the audit failures.
Some of the firms are involved with earnings management projections of Wall Street
by misstating the actual figure and outcomes (Braswell and Daniels 2017). The managers and
auditors are involved in earning management practices, for manipulating the actual results in
order to show a better quality disclosure for the financial statement.
There were accounting scandals because of lack of a proper guidance and standards
for doing accounting practices. Arthur, along with the other auditors faced these type of
problems because, there were no such accounting rules and standards for the auditors. They