Reference no: EM133004129

It has been observed "steps taken to manage earnings can range from the employment of conventional GAAP flexibility, to flexibility that strains its GAAP connection, to behaviour that goes well beyond GAAP boundaries and into the dark realm of fraudulent financial reporting".

(Charles W. Mulford and Eugene E. ComiskeyThe,

Financial Numbers Game Detecting, Creative Accounting Practices,2002,

JOHN WILEY & SONS, INC.)

Required:-

1. Critically evaluate earning management within conventional GAAP flexibility? How does it differ from behaviour that goes well beyond GAAP boundaries and into the dark realm of fraudulent financial reporting?

2. Is there any relationship between corporate governance mechanisms and earning management in business organisations?

3. How would earning management affect the true and fair view of accounting reporting? Can it be fraudulent? Provide any two cases to support your answers.

4. Is the practice of earning management consistence with the qualitative characteristic of Financial Accounting?