Accounting manipulation
Also called: accounting fraud, earnings management, creative accounting
Bending accounting choices or recording false transactions to make a company's results or position look better than they are.
Techniques include recording fictitious or early revenue, capitalising ordinary expenses, understating provisions, hiding debt and inflating cash. Because profit is easier to manipulate than cash, most techniques eventually show up as a gap between profit and cash or as strange balance sheet items.
Learn more in these lessons
- Accounting manipulation and fraud indicatorsHow are company accounts manipulated, and can outsiders spot it?
- Case study: an accounting fraud (Satyam, 2009)What can investors learn from the Satyam accounting fraud?
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