Annotated Bibliography

Name:

Tutor:

Course:

Date:

Annotated Bibliography

In as much as accounting assists stakeholders in identifying and understanding a company’s business practices, it is also liable to unethical use. Accordingly, several corporations have engaged in misinformation of vital stakeholders such as investors and customers alike in order to engage in misappropriation of company funds. They have been able to do this through generating false financial reports based on accounting techniques. Such statements typically indicate that an organization’s financial performance is at par and mislead investors coaxing them to continue injecting more finances.  However, in the long term, especially after an extensive audit, investors wind up facing considerable losses as an outcome of an organization’s immoral schemes. In addition to this, the lack of trust between employees and proprietors further enhances the susceptibility of a company’s accounting practices to undergo exposure after intense investigation. Based on this, it is evident that accounting is a field that can benefit from having both males and females excel within it.

Indeed, one of the scandals that generated considerable research concerning the detailing of accounting practices is the Enron swindle. As a large corporation, the company, through the collusion of the management and an external auditing firm, was able to engage in fraudulent financial schemes that imposed losses on investors and other shareholders (Arnold and Lange 752). The lack of proficiency among employees led to the use of unethical financial units such as Special Purpose Entities (SPEs), which continued to amass more financial wealth from shareholders at their own expense (Arnold and Lange 761). Had there been significant expertise in accounting, then much of the practices that took place within the organization would have undergone exposure. Nonetheless, it seems that this fact consistently faces disregard based on the increasing amount of cases involving financial fraud as an outcome of deficient accounting practices.

An example of such a case involves the exposure of massage parlors, which engaged in prostitution (Donnell-Watson & Galliher 1). Accordingly, the Internal Revenue Service, under the data provided by an informant, was able to expose a massage parlor business that also engaged in a prostitution ring. The business had been able to continue for long periods based on corruption within its accounting practices, especially on the part of the owners. Even though it is a crime for a business to engage in activities restricted by law, it was still possible for the aforementioned company to gain profits from prostitution due to the manipulation of accounting practices (Donnell-Watson & Galliher 3). Nonetheless, even though it seems unethical to argue for the business, one cannot deny the extent to which its accounting practices allowed the business to flourish irrespective of the fact that it engaged in a proscribed activity.

Indeed, excellence in accounting is possible if male and female employees utilize it to their own advantage. In order to ensure that a business is aware of its profits and losses, accountants need to guarantee that they manage finances appropriately. This undergoes reflection in the massage parlor-cum-prostitution business. Before the introduction of accounting practices, the money received from customers for prostitution services usually ended up in the owners’ practices. This was detrimental for the business since the owners were able to exploit the women based on the way they controlled the money. In the long-term, such a practice would have generated considerable corruption and in turn, created considerable losses for the business at the expense of the employees and the proprietors themselves. After the introduction of accounting mechanisms such as record keeping, the business was capable of staying afloat (Donnell-Watson & Galliher 5).

The utilization of record keeping managed the business’ finances by enabling it to possess a checking account. In relation to the business, it is also evident that accounting benefits from proficient males and females based on compliance and knowledge of accounting regulations. Indeed, due to proficient accountancy within the business, the owners were able to avoid any suspicion by ensuring that the usual record keeping was visible to the government (Donnell-Watson & Galliher 6). Based on this, the business’ practices seemed compliant with accounting regulations since the government had the capability of imposing tax liabilities on the prostitutes. Furthermore, the government was also able to impose levies on the business, specifically based on sales tax (Donnell-Watson & Galliher 6). Further expertise in accountancy is also important since it enables the field to determine financial and default risks, which may affect a business negatively if not discovered.

In conclusion, the field of accounting may only be profitable if male and female employees understand it completely. This is because they are capable of structuring accounting practices in ways that may benefit a business and its respective employees. With the case of the massage parlor, proficient accounting experts enabled the business to run for a long term even though it engaged in proscribed activities such as prostitution. Mechanisms such as record keeping enabled the company to legalize part of its practices and thus, allow it to run as a usual incorporated organization. However, even though the business engaged in unethical and illegal practices, the proficiency in the respective field proves that accounting can solely benefit if males and females excel in it.

 

Works Cited

Arnold, Beth & Paul de Lange. “Enron: An examination of agency problems.” Critical Perspectives on Accounting 15.6-7 (2004): 751-765. Print. In this article, Arnold and Lange discuss the reasons that were responsible for the fall of Enron Corporation. Much of the focus by the authors revolves around the issue of agency problems, which according to him, were liable for Enron’s collapse and bankruptcy. Furthermore, Arnold and Lange also assess maleficent business and financial practices, which were answerable for the corporation’s descent.

Donnell-Watson, D. J., and John F. Galliher. “Accounting for Prostitution.” MA thesis. Missouri University, 1993. Print. Based on an authentic experience, Donnell-Watson and Galliher discuss the corruption of accounting practices in businesses engaged in illegal economic activities. Through a case study of a massage parlor business that engaged in prostitution, both authors elucidate the considerable benefits brought to the company by accounting knowledge and practices as well as the disadvantages experienced from utilization of the same procedures.

Leave a Reply

Your email address will not be published. Required fields are marked *