Earnings Management’s Incentives1Executive Summary: The collapse of Australia’s one of largest telecommunication companies was a major event occurred in 2001. There were many reasons behind One-Tel’s failure to survive longer. This report contains the major coverage of company’s practices of Earnings Management. There are various incentives for which the managers of the company adapts such practices of misleading the company’s stakeholders by a way of falsifying the financial reports. There areenormous techniques of altering the financial statements by the managers for their personal orfirm’s benefits.
Earnings Management’s Incentives2Introduction:One-Tel was one amongst the largest Australian Companies as it was holding the fourth position in the ranking of largest telecommunication organisations. The company was founded in the year 1995. But, in 2001 the company had to face its collapse for certain reasons such as deficiencies in the internal controls, severe weaknesses in the system of corporate governance, manipulated financial reports, poor quality of audit etc. The company was engaged in the practice of earnings management for its personal profiteering objectives which involved falsification of company’s financial report to mislead the investors and other stakeholders of the company.
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