Description

This course provides an overview of earnings management techniques and their ethical implications. This course covers basics like revenue recognition timing, expense manipulation, provision adjustments, income smoothing, and cost-cutting. This course also addresses more advanced methods such as financial engineering, tax planning, big bath accounting, accounting policy changes, and round-trip transactions. Throughout this course, the ethical considerations inherent in these techniques are addressed through a series of example situations.

Chapter 1 covers key earnings management method such as revenue recognition timing, expense manipulation, provision and reserve manipulation (e.g., cookie jar reserves), asset valuation adjustments, income smoothing, and cost-cutting timing. It provides a foundation for identifying basic earnings management practices and their impact on financial statements.

Chapter 2 covers advanced earnings management strategies such as financial engineering, tax planning, big bath accounting, changes in accounting policies, and round-trip transactions. Each of these methods are discussed, along with hypothetical examples illustrating their application.