Accounting Fraud, Earnings Manipulation, and Creative Accounting Research Paper

Accounting Fraud, Earnings Manipulation, and Creative Accounting - Research Paper Example financial reporting process, and also put into doubt the role played by management, regulators, auditors, and analysts in preventing accounting fraud. Businesses employ deceptive or fraudulent accounting practices such as creative accounting to match the expectations. Accounting fraud refers to an intentional and inappropriate falsification of a company’s accounting records such as the stating of sales revenue and/or expenses. Accounting fraud is geared towards making a company’s financial performance (operating profit) appear better than it is. The motivation for misrepresentation of accounting records hinges on the profit motive and sourcing a favorable financing and dodging debt obligations. Companies commit accounting fraud through activities such as failing to record prepaid expenses or other incidental assets, failing to show certain classifications of current assets and/ or liabilities, or collapsing both short-term and long-term debt into a single amount (Jones 3). Overstatement of sales revenue is one of the techniques employed in committing accounting fraud. Overstatement of sales arises from activities such as channel stuffing and delaying recording of products returned by clients. This is directed at avoiding recognition of those offsets against sales revenue within the current year. Other means by which businesses commit accounting fraud include under-recording expenses such as depreciation expense. In some instances, businesses fail to record the cost of goods sold expenses in order to make gross margins appear higher (Rezaee and Riley 82). Similarly, accounting fraud occurs when a business fails to state asset losses that ordinarily should be identified such as uncollectible accounts receivable or not writing down inventory under the lower of cost or market rule. In addition, a business may fail to record the full amount of liability for an expense. Accounting fraud may also feature abuse of corporate funds and overstating of the co rporate assets (Tirole 300). Creative Accounting Creative accounting (aggressive accounting) details accounting practices that are not necessarily considered illegal, but which are potentially misleading to investors and considered as unethical, regardless of the fact that the strategy is well within the letter of the law (Shah, Butt and Tariq 531). The resultant financial statements do not reflect the â€Å"true and fair† view of the company accounts. For instance, a firm may want to paint a perception that it is financially stronger whereas it has achieved little or no growth at all. Most businesses use creative accounting to enhance desire for stock issued so as to drive up the value of the shares and amass benefits to the business. Examples of creative accounting include off balance sheet financing, overoptimistic revenue recognition or application of overstated nonrecurring items. Motivations for Accounting Fraud The prominent cited motivations for accounting fraud encom pass the urge to meet internal or external earnings expectations. Thus, there is an attempt to conceal an entity’s deteriorating financial condition. In addition, financial fraud is motivated by the need to raise a company’s stock price as well as the urge to bolster a company’s financial performance owing to a pending equity or debt financing. Similarly, accountants engage in financial fraud so as to enhance management compensation based on financial results. The two most common techniques employed in fraudulently misstating the financial statements encompass improper revenue recognition and asset overstatements, primarily by overvaluing the present assets or capitalizing expenses. Other tricks employed in committing financial fraud include understatement of expenses and liabilities,

Lululemon Marketing Anaylsis Research Paper Example | Topics and Well Written Essays - 1500 words

Lululemon Marketing Anaylsis - Research Paper Example The company boasts of her ability to incorporate fashion and style in their products, which has ensured her strong brand recognition and high number of sales. The company’s concentration in Canada is much better especially brand awareness than in the US despite the fact that it has more stores in US than Canada. Current Market According to Tucker, Lululemon identifies itself with a high quality as well as exclusive yoga and sporting apparel strictly meant for female (Web). It operates in numerous stores across North America, Australia and New Zealand where it offers women’s wear for yoga, dance, running and other sport events. Most of the company’s customers are high-income women that are insulated to prices and the downturn of the economy as was evident in 2008 when the sales grew despite economic challenges. It has more stores in U.S compared with Canada that contributed to the $452.9 million revenue and gross of $ 223. Lululemon intends to make her US brand as better as the Canadian one because US has more stores than in Canada. The company is putting a lot of effort boost her brand awareness in the US market (Tucker Web). The organization has successfully returned to the community that gives it support such as hosting free yoga events around town. The company focuses on high quality products, which attracts higher prices for her upper income women target. Lululemon ensures prestigious and exclusive products that act as fashion forward and shows a healthy, well off lifestyle. The expensive high-end workout apparel has seen it standing even amid recession in 2008 due to the current market perception of the brand. Target Market Lululemon’s target market is 18-34 fit, health conscious and fashion forward, high-income females who are the company’s vital customers. The active young thinking woman who are appearance conscious, physically fit and well educated. Lululemon targets mostly the upper and middle class females residing i n North America with the niche marketing strategy by pursuing a narrowly defined market segment. The niche market strategy has greatly contributed to the success of the company thus making it remain a primary market target. In the recent past, the company has been striving to gain reach the male workout market for some time (Tucker Web). New male clothing brand with very high quality is another target market that the company looks forward to dominate. The males targeted are educated and physically active and appearance conscious aged between 16 and 45 living in North America. It is also targeting the pre-teen girls who may not be identified with the more mature females as well as more for more value proposition within all brands of the company. The target customer for Lululemon is very complex, active as well as health and is aimed at carrying out product expansion and matching the lifecycle and social status of those women. Current Marketing Strategy Acording to Ellis, Lululemonâ⠂¬â„¢s goal is to implement brand extension and reposition brand awareness that may result into 10% total growth as well 5% female growth within the next one year (Web). The strategy also involves holding a challenge in five Canadian cities and general 10% increase until 2025. The company has laid down various marketing strategies that may boost her sales and cover wider market. There are special marketing displays proposed by the management that helps in displaying products in stores for customers to distinguish between the products.