Borderline illegal accounting example?

Question

I'm looking for an example of a company who, in their accounting, was doing something very borderline as to whether or not it was illegal, in regards to earnings management. Not looking for the obvious ones like enron or worldcom

Answer 1

Businesses often find that they are not in compliance with terms of various contracts they have with customers or vendors. This is technically illegal, but once a party becomes aware of it, the issue should be addressed.

The ethical question arises when a company discovers non-compliance that benefits them and harms the other party. If the other party hasn't noticed, is the non-compliant party legally obligated to take corrective action?

Also, there are countless examples in the industry where businesses revert to form over substance. Hiring contractors indefinitely to avoid paying benefits were they to hire the individuals as employees...it's becoming more common every day. Is it borderline illegal to vote a pay raise for executives and lay off entry-level workers?

Businesses will occasionally attempt to capitalize R&D costs instead of expensing them. While this is not necessarily illegal, it is certainly a violation of accounting standards.

That's all I can think of...Sorry, but I can't think of any specific examples right now.

Answer 2

Actually, Enron is a very good example.

Their accounting paractices were 'questionable'. They had some very good lawyers and accountants draw them up to be *just* the legal side of the line. The government disagreed, and prosecuted. They then used some very sharp prosecutorial tactics to turn some of those lawyers and accountants and get them to change their opinions about the legality of the practices.

Richard

Answer 3

The width of the border is less than the width of a human. You would either be in one country or the other.