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Other Reasons Include Debt Covenant Avoidance, Costs Of Investment, ...

Other reasons include debt covenant avoidance, costs of investment, sustainable long-term performance and meeting up with bonus plan requirements etc. among others. The pressures of management performance, leadership, market failure, and future losses tend to motivate top management to conceal internal misappropriations and misstatements. The influence of these pressures on the reported statements is great as analysts depend on the information to make investment decisions, debt covenant, and professional prediction. Abuse in the form of manipulating accounts affects not only the firm but also the industry and the economy at large.
Given the above rationale the researcher is of the view that there is a great need to study accounts manipulation and its affect on industries, the public, accounting and auditing professionals, and the investment environment as a whole.
Objectives
The objectives of this study are as follows:
To investigate how firms like Enron and WorldCom engage in accounts manipulation using financial ratios.
To investigate the ethical and professional implications of financial ratios manipulation through accounting misstatements, earnings management and restatements.
To study the role of the regulatory authority in contributing or deterring accounts manipulation by comparing the accounting standards in the US and UK.

Scope
The researcher aims to evaluate pertinent industry practice by evaluating case studies of Enron and WorldCom. The researcher shall also delve into issues of accounting principles weaknesses and the role of the authority in contributing to the current trend of accounting fraud and manipulation. Consequently, the study shall benefit professionals who are in the field, trying to find solutions for the current trend and how to curb it. Academicians might find the use of theoretical frameworks to study a current accounting dilemma interesting and contributory to future works. Moreover, the researcher expects the results of the study enumerating to both students and academicians alike who are interested in the study of accounting fraud and manipulation.
However, readers might find the scope of this study limited in the sense that it will be focused on accounts manipulation particularly in the use of financial ratios. There are other methods of accounting manipulations, which will be covered briefly in the research. Overall, readers will find the findings useful and informative.
Work Map
The study shall be divided into the following sections:
Chapter 1 introduces the topic through a brief overview of the current norms and practices in accounts manipulation. It also points out reasons why there is a need for the study with objectives for directing the topic for discussion in the following chapters.
Chapter 2 is a Literature Review, which shall trace the Enron and WorldCom scandals in the light of accounts manipulation.