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Creative Accounting, Fraud and International Scandals
The British Accounting Review 44 (2012) 204
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The British Accounting Review journal homepage: www.elsevier.com/locate/bar
Book review Creative Accounting, Fraud and International Scandals, Michael Jones (Ed.). John Wiley & Sons Ltd, Chichester (2011). xxv D 550 pp, £50.00, ISBN: 978-0-470-05765-0 This is a timely and important accounting text that provides its readers with an intelligent and comprehensible explanation of when, how and why corporate business managers and directors attempt to report accounting untruths particularly to their often remote shareholders and stakeholders more widely, and always in the presence of professionals whose claim is to be expert auditors and assessors of the quality of accounting reports. The market for this book is stated on its jacket to encompass almost anyone with an interest in corporate affairs generally and financial reporting specifically. However, the principal readers will undoubtedly be accounting students learning about advanced aspects of accounting, reporting, and auditing within the general umbrella of creative accounting. Secondary markets may include advanced accounting students concerned with comparative international accounting. The book has three sections. The first section comprises seven chapters written by the editor in which he clearly and sensibly sets the scene to the creativity play that is accounting, exploring the motivations, methods and evidence of creativity and impression management as well as the history of the subject. The second section uses specialist writers from twelve different countries around the world to explain creative accounting in these individual countries (the UK and the US, six in Europe and four in Asia and the Pacific Rim), and also looks at recent bank failures during the 2008–9 global financial crisis. The individual countries are presented alphabetically and it might be easier for the teacher and student leader to have them grouped geographically. The third section reverts to the editor’s choice of creativity themes, impacts, and future outlook. The largest part of the book is the second section of international contributions although, arguably, the editor’s contributions will be of interest to the most readers. This is not a book about fraud or international accounting as the somewhat misleading title explains. Both are sub-plots in a sort of morality play that says, whenever possible and for various reasons, senior corporate managers and directors do not like telling the financial story of their organisations truthfully. Instead, whatever the global location and despite a raft of standards, regulations, and monitors, they obscure, enhance, or reduce their performance in accounting terms to the detriment of their principals to whom they owe a duty of care as agents. The story is one of a curious moral hazard – despite the standards, regulations, and monitors (including auditors), investors and creditors need to be aware of the creativity in reported accounting numbers. The level of awareness, according to this book, needs to be at high alert if the reporting company has dominant managers, complex organisational structures, long-serving auditors, cross-border transaction flows, and business activity that not even its managers and directors understand. What is particularly of interest in this book is that accounting creativity exists globally and in many languages, and stretches from the mildly irritating avoidance of prescribed standards to the out and out falsification of accounting records and statements. Despite a prescribed and relatively homogeneous remit from the editor, the quality of each chapter varies but not to the point that any are deemed to be poor. Far from it, each chapter in its own way adds to the gloom of the accounting cynic who believes accountants are magic bean counters pretending to be professionals. The editor and his contributors are to be congratulated in producing this book. It should be read by anyone hoping to become an accountant and any accountant who feels a twinge of doubt about his or her professional status. In a second edition, the editor is urged to find space for a chapter dedicated to the role of the auditor in the world of accounting creation. Thomas A. Lee Accountancy, University of Alabama, USA Honorary Professor of Financial Reporting & Corporate Governance, University of St Andrews, UK E-mail address: [email protected]
http://dx.doi.org/10.1016/j.bar.2012.07.007
Contents lists available at SciVerse ScienceDirect
The British Accounting Review journal homepage: www.elsevier.com/locate/bar
Book review Creative Accounting, Fraud and International Scandals, Michael Jones (Ed.). John Wiley & Sons Ltd, Chichester (2011). xxv D 550 pp, £50.00, ISBN: 978-0-470-05765-0 This is a timely and important accounting text that provides its readers with an intelligent and comprehensible explanation of when, how and why corporate business managers and directors attempt to report accounting untruths particularly to their often remote shareholders and stakeholders more widely, and always in the presence of professionals whose claim is to be expert auditors and assessors of the quality of accounting reports. The market for this book is stated on its jacket to encompass almost anyone with an interest in corporate affairs generally and financial reporting specifically. However, the principal readers will undoubtedly be accounting students learning about advanced aspects of accounting, reporting, and auditing within the general umbrella of creative accounting. Secondary markets may include advanced accounting students concerned with comparative international accounting. The book has three sections. The first section comprises seven chapters written by the editor in which he clearly and sensibly sets the scene to the creativity play that is accounting, exploring the motivations, methods and evidence of creativity and impression management as well as the history of the subject. The second section uses specialist writers from twelve different countries around the world to explain creative accounting in these individual countries (the UK and the US, six in Europe and four in Asia and the Pacific Rim), and also looks at recent bank failures during the 2008–9 global financial crisis. The individual countries are presented alphabetically and it might be easier for the teacher and student leader to have them grouped geographically. The third section reverts to the editor’s choice of creativity themes, impacts, and future outlook. The largest part of the book is the second section of international contributions although, arguably, the editor’s contributions will be of interest to the most readers. This is not a book about fraud or international accounting as the somewhat misleading title explains. Both are sub-plots in a sort of morality play that says, whenever possible and for various reasons, senior corporate managers and directors do not like telling the financial story of their organisations truthfully. Instead, whatever the global location and despite a raft of standards, regulations, and monitors, they obscure, enhance, or reduce their performance in accounting terms to the detriment of their principals to whom they owe a duty of care as agents. The story is one of a curious moral hazard – despite the standards, regulations, and monitors (including auditors), investors and creditors need to be aware of the creativity in reported accounting numbers. The level of awareness, according to this book, needs to be at high alert if the reporting company has dominant managers, complex organisational structures, long-serving auditors, cross-border transaction flows, and business activity that not even its managers and directors understand. What is particularly of interest in this book is that accounting creativity exists globally and in many languages, and stretches from the mildly irritating avoidance of prescribed standards to the out and out falsification of accounting records and statements. Despite a prescribed and relatively homogeneous remit from the editor, the quality of each chapter varies but not to the point that any are deemed to be poor. Far from it, each chapter in its own way adds to the gloom of the accounting cynic who believes accountants are magic bean counters pretending to be professionals. The editor and his contributors are to be congratulated in producing this book. It should be read by anyone hoping to become an accountant and any accountant who feels a twinge of doubt about his or her professional status. In a second edition, the editor is urged to find space for a chapter dedicated to the role of the auditor in the world of accounting creation. Thomas A. Lee Accountancy, University of Alabama, USA Honorary Professor of Financial Reporting & Corporate Governance, University of St Andrews, UK E-mail address: [email protected]
http://dx.doi.org/10.1016/j.bar.2012.07.007