Predictive accounting

✍ Scribed by Jim Brimson; John Antos

• Book ID: 102299484
• Publisher: John Wiley and Sons
• Year: 2004
• Tongue: English
• Weight: 250 KB
• Volume: 15
• Category: Article
• ISSN: 1044-8136
• DOI: 10.1002/jcaf.20006

✦ Synopsis

Abstract

Accounting is designed to meet fiduciary requirements rather than give transparency to operational
performance. This is a weakness that dooms the current accounting model to be largely irrelevant. If
Enron's off‐balance‐sheet investments had proved successful, we would never have heard of
Enron's accounting practices. Only during a performance crisis are accounting practices scrutinized. The
reason is simple: There is very little reason to bend accounting rules when performance is excellent, but there
are many reasons to take advantage of flexible accounting rules when performance degrades. © 2004
Wiley Periodicals, Inc.