Reference no: EM132567571

MASTERING CORPORATE GOVERNANCE: WHEN EARNINGS MANAGEMENT BECOMES COOKING THE BOOKS There is often a blurred line between appropriate and inappropriate accounting techniques, but the audit committee must attempt to clearly distinguish which is which. The guiding principle of the audit committee is shifting from a focus on technical accounting procedures to determining whether disclosures in the financial reports present a true and fair view of the entity's affairs. Companies often face a great deal of pressure to meet the earnings forecasts they present to investors and analysts, or the estimates these analysts make. Executives of companies in this situation often resort to using a range of 'earnings ­management' techniques to help them 'make the numbers'. These techniques will often exploit loopholes in generally accepted accounting principles (GAAP) to manipulate the company's income. It is up to the audit committee members to identify whether earnings management, accounting -estimates and other judgements are legitimate or are designed to blur the true financial position of the company.

Question 1: What earnings management techniques are outlined in the above article?