Schilit recognizes that cash flow shenanigans also exist when a company takes actions to send their desirable cash inflows to the most important section (Operating) and all of the unwanted cash out flows to the other sections (Investing and Financing). Given that regard less of the classification of the cash flows the result is the same with respect to the amount of change in cash flows during the designated period, what motive might exist to shift investing and/or financing cash flows to the operating section? Is this an ethical practice? Why or why not?
Answer to relevant QuestionsIn the study of earnings quality by Dichev et al., CFOs stated that “current earnings are considered to be high quality if they serve as a good guide to the long-run profits of the firm.” Discuss how and why current ...1. Review the definitions of earnings management by Schipper, Healy and Whalen, Dechow and Skinner, and McKee that are discussed in this chapter. How would you characterize the proposed accrual for unpaid bonuses and ...In this chapter we discuss problems encountered by the PCAOB in gaining access to inspect work papers of audits by U.S. international accounting firms of Chinese companies. Explain why these problems exist including ...What is the difference between legal and ethical compliance with corporate governance provisions? Discuss what might be the ethical compliance mechanisms from a virtue ethics perspective.Ernst & Young released its 2011 European Fraud survey that includes a warning against the manipulation of asset impairment write downs due to the subjective factors used and judgment needed to draw conclusions about the ...
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