Accounting Scandals Research Articles (Page 1)

Introduction/Main Objectives: This paper examines the professionalism of accountants and its role in sustaining public trust in the digital era. Professionalism is viewed not only as technical competence but as a multidimensional construct shaped by ethics, expertise, and adaptability to technological transformation. Background Problems: Accounting scandals, both globally and in Indonesia, have eroded confidence in the profession. Meanwhile, rapid digitalization introduces new risks and ethical challenges, raising questions about whether traditional codes of ethics adequately address issues such as data privacy, algorithmic bias, and cyber fraud. Novelty: This study integrates ethical, technical, and digital aspects into a comprehensive framework of professionalism. The Indonesian context illustrates how cultural values and uneven digital readiness influence professional conduct. Research Methods: A qualitative literature review was conducted using academic journals, professional codes of ethics, and regulatory documents. Content analysis identified recurring themes across ethics, competence, and digital literacy. No primary data were collected, as the research relied entirely on secondary sources. Findings/Results: The findings show that professionalism is multidimensional, combining ethical integrity, technical skill, and digital adaptability. Accountants engaged in continuous learning and digital upskilling are more capable of preventing fraud, ensuring compliance, and maintaining credibility. However, disparities in training and infrastructure in Indonesia limit consistent professional quality. Conclusion: Professionalism in the digital era requires balancing ethics, competence, and digital proficiency. Future studies should employ bibliometric or empirical methods to validate the conceptual relationships proposed.

Purpose of the Study: The current study aims to examine and analyze current developments in international auditing standards considering the increasing application of creative accounting practices in listed companies. Therefore, the current study critically discusses the motives, methods, repercussions, and potential mitigating mechanisms. It also reviews some of the most controversial accounting scandals in the world. Methodology: Creative accounting is a global problem, negatively impacting financial statements in every country. To achieve the objective of the current analytical study, five questions were formulated to answer the roots, motives, and methods of creative accounting; to clarify the effects of creative accounting practices on financial statements and stakeholders; to discuss the position of audit researchers on creative accounting practices; and to analyze and evaluate the position of international professional organizations on current developments in international auditing standards and their role in curtailing creative accounting practices. Results: The study confirmed that there is an unreasonable, dishonest, and excessive use of creative accounting practices in companies, which has led to the downfall of many prominent companies worldwide. Many more will fall in the same direction, because the real problem with creative accounting practices lies in management’s behavior and motives, and their use of their right to choose accounting policies and make accounting estimates. International professional organizations have also emphasized in all their publications that the responsibility for preventing creative accounting practices (fraud without embezzlement, manipulation, and misleading) or earnings management falls on management, those charged with governance, the board of directors, and all company employees. These stakeholders have been emphasized in their efforts to prevent this. Accordingly, the auditor’s role in detecting creative accounting practices has been expanded by evaluating four important areas, including revenue recognition, changes in accounting policies, changes in accounting estimates, and unusual items, considering the application of international auditing standards. Recommendations: Despite the development of auditors’ duties and responsibilities through international auditing standards, it is not possible to completely limit the impact of creative accounting practices, because management is the main player by virtue of its responsibility. However, accounting and auditing standards need to be simplified, as they have become more complex considering evolving economic events and activities, financial crises, and investor pressure. Therefore, management ethics play an important role, as do the ethics of the accounting profession. However, perhaps more important is enforcing the law or regulation and creating more effective corporate governance practices to limit the phenomenon of creative accounting in listed companies. Overall, the research contributes to a deeper understanding of the challenges and opportunities associated with creative accounting practices, which guides stakeholders in dealing effectively with this dynamic landscape. Future Studies: Within the framework of the development of international auditing standards to limit creative accounting practices, the study proposes for researchers and academics to examine the impact of auditor report content developments on the informational value (credibility) of the auditing profession; the impact of expanding auditor professional responsibilities on audit fees; the relationship between creative accounting practices and company/audit failure; the relationship between creative accounting practices and auditor change; and the impact of professional ethics on detecting creative accounting practices. Finally, the researcher hopes to conduct a field study examining the impact of current developments in international auditing standards on limiting creative accounting practices in the business environment in the Arab world, God willing. Terminology: Auditing Standards – Creative Accounting Practices – Professional Ethics – Governance.

Accounting scandals persist despite their well-known harmful effects on corporate reputation, investor trust, and economic stability. This study finds that 84% of respondents acknowledge their prevalence, and 85% expect them to continue despite regulations. Key factors include weak corporate culture and governance, auditor conflicts, complex financial instruments, earnings pressure, flawed executive compensation, and poor internal controls. These scandals erode public trust, investor confidence, financial stability, and auditing credibility. The study emphasizes the urgent need for stronger regulatory frameworks, improved corporate governance, and rigorous enforcement to reduce fraud recurrence and protect market integrity.

In today’s digitally driven public sector, the rapid adoption of technology has improved service delivery but also created a fertile ground for cyberattacks, particularly because many public institutions lack effective cybersecurity policies (Choi, 2021). Cybercrimes such as hacking, phishing, and malware infections pose significant risks, often leading to fraud and accounting scandals that undermine public trust. This research examines the cyberthreats faced by local authorities in Masvingo Province and evaluates the effectiveness of their cybersecurity policies in preventing and detecting these crimes. A quantitative approach was adopted, utilizing questionnaires administered to 80 participants, with data analyzed using SPSS version 23. Findings reveal that local authorities are notably exposed to a range of cyberthreats, with the absence of comprehensive cybersecurity policies and inadequate training being prevalent issues. This study underscores the urgency for the government to develop and implement robust cybersecurity policies for local authorities, with the auditor general tasked to regularly audit their effectiveness.

This study investigates how corporate board characteristics, foreign auditors, and strategic alliances influence earnings management (EM) among Indian listed firms, an issue of growing concern due to widespread accounting scandals and weak institutional enforcement in emerging markets. Using a panel dataset of firms listed in the NIFTY 500 index from 2014 to 2019, the study estimates earnings manipulation via the modified Jones (1991) model and employs fixed effects and two-stage least squares regression models to address endogeneity. The findings show that board independence and the presence of foreign auditors significantly reduce EM, while greater board activity is positively associated with EM. The influence of board size is marginal, and the findings suggest the limited utility of relational governance in India’s institutionally weak environment. Robustness tests using alternative EM proxies confirm these findings. This study contributes to the governance literature by highlighting the nuanced roles of formal and informal governance under institutional voids, offering practical insights for regulators, investors, and policymakers in emerging economies.

Phenomena related to earnings management practices raise ethical dilemmas, especially for accounting students. This research aims to analyze the influence of the ethical orientation of idealism and relativism on accounting students' perceptions regarding earnings management practices with the level of ethical knowledge as a moderating variable. The research was conducted on accounting students at Tadulako University from July to September 2023 with a sample size of 267, with PLS analysis. The research results prove that the influence of idealism has no effect on accounting students' perceptions regarding earnings management practices. Relativism has a positive effect on accounting students' perceptions regarding earnings management practices. The level of ethical knowledge strengthens the influence of idealism and relativism on accounting students' perceptions regarding earnings management practices. Idealism and relativism have a positive simultaneous effect on students' perceptions regarding earnings management practices. Therefore, the results of this research can be used as a reference for academics so that in the learning process they can incorporate ethical values into each lesson and conduct case study discussions regarding accounting scandals that occurred.

Purpose This study aims to examine the over 60-year evolution of behavioral accounting research (BAR), with the main aim of critically and accurately tracing its past, present and future. Design/methodology/approach This study used Scopus and Google Scholar databases to collect 2,263 articles of BAR published on relevant accounting journals. Thus, this study used Bibliometrix to provide a temporal overview of articles and a temporally oriented network co-occurrence analysis of BAR topics. Findings This study retraces the history of BAR since its origins and, also on the basis of triggering events inside (e.g. Nobel Prizes for behavioral economics studies) and outside (e.g. accounting scandals) the academic debate, this study critically discusses the evolution and interconnections of BAR topics. Then, future research is addressed toward main promising avenues, thus integrating recent technological applications into the behavioral accounting experimental designs to improve their external validity, exploring the potential positive effects of professionals’ heuristics in performing accounting tasks under certain environmental conditions, exploiting behavioral accounting frameworks to analyze and improve sustainability reporting and sustainability performance management. Originality/value Although BAR is rich of contributions, including subfields and contaminations, it lacks a holistic evaluation of its origins, development and future perspectives. In this vein, to the best of the authors’ knowledge, this is the first study to use a bibliometric analysis to evaluate the evolution of BAR.

This study aims to compare the ethical environment perceptions between accountants working in public companies and accountants working in private companies. The organization has experienced a decline in ethical values due to numerous accounting scandals and dysfunctional behavior. The institutional logic theory is used as a framework. The data was collected using questionnaires from 768 accountants working in public companies, private companies, and universities in Indonesia. The questions encompass three main factors, namely social norms, social practices, and outcomes. Hypothesis testing was conducted based on the mean values, standard deviations, and regression analysis. The correlation between variables was assessed using the Pearson product moment and spearman methods. The study results indicate that accountants working in public companies perceive the ethical environment to be stronger than accountants working in private companies. This study holds significant social and economic relevance. Assessing the ethical environment of both private and public companies aids stakeholders in developing governance policies that can reduce the potential for accounting scandals and enhance public trust. The study provides important insights into the ethical environment of accountants across the accounting profession. The study’s findings are perception-based and may not always reflect actual ethical practices. Several suggestions for future research are outlined in this paper.

Barth et al. (J Account Res 37:387–413, 1999. https://doi.org/10.2307/2491414) find that the market rewards firms showing increasing earnings patterns with larger price-earnings multiples from 1982 to 1992. This paper examines whether the rewards for increasing earnings patterns have changed since then. The declining relevance of accounting earnings for equity valuation or accounting scandals in the early 2000s would predict a lower valuation for earnings numbers. On the other hand, earnings-related disclosures and post-scandal regulatory efforts, such as the Sarbanes–Oxley Act (SOX), may boost earnings relevance and restore investor confidence in the accounting system, predicting increased rewards for increasing earnings patterns. We find that the earnings multiples for firms with increasing earnings patterns decrease temporarily in the years with major accounting scandals, but the market boosts its rewards to firms showing increasing earnings patterns in the reshaped reporting environment after 1993, and SOX is associated with this boost.

The prevalence of unethical practices and the erosion of ethical values in the accounting profession underscore the need for integrating character education into accounting curricula. High-profile accounting scandals like Enron and WorldCom highlight the critical importance of fostering ethical behavior and social responsibility among future professionals. This literature review explores the integration of Tri Hita Karana, a Balinese philosophy promoting harmony among human-God, human-human, and human-environment relationships, with contextual learning in accounting education. The study suggests that incorporating Tri Hita Karana into the curriculum through community-based projects and real-world ethical scenarios enhances students' ethical and professional competencies. Empirical evidence from various studies supports the effectiveness of this integrated approach in developing students' ethical judgment, social and environmental awareness, and spiritual well-being. This holistic educational model not only prepares students for professional challenges but also promotes broader cultural shifts towards ethical integrity in professional practices.

In order to ensure the correct economic order, it is important that the data and information produced are accurate and complete. In order to ensure this order, the information used in accounting should be accurately reflected to the owners and employees of the enterprises, the persons / organizations that invest and lend to the enterprise and the public. However, in some cases, accounting information is reflected incorrectly to users due to intentional and in some cases unintentional errors. The factors that lead employees to fraud can be classified under 3 headings: finding a suitable target, lack of control, and having employees who are inclined to fraud. In particular, errors and fraud in financial statements have undermined the trust in the accounting profession, reduced transparency, misled those concerned with the business and caused erroneous decisions, and most importantly, caused accounting scandals by creating an obstacle to economic development. In recent years, many practices have been introduced to prevent accounting scandals that have emerged in the world. As in the whole world, accounting frauds are encountered in Azerbaijan and Turkey, and many sanctions and practices are made to prevent them.

This study determines the extent to which loosening institutional shareholder monitoring intensity induces earnings management, thereby leading to accounting scandals. When there is intense monitoring of the corporate executives, their opportunistic tendencies are prevented, and corporate decisions align with the value-creation target. The study postulates that institutional shareholders' relaxed monitoring role positively and significantly impacts earnings management. The more robust Two-Step System GMM was used to analyse the collected data of companies listed on the Johannesburg Stock Exchange (JSE) for 15 years from 2004 to 2019. The finding revealed that slack institutional shareholders' control affects earnings management positively.

The core aim of the financial reports is to provide a firm’s annual results of financial performance and position to stakeholders on time. Several accounting scandals led to the default of many large-scale corporations, leading to investors’ lack of confidence in the reliability of financial information and also putting a question mark on the effectiveness of internal control mechanisms and external audits. Business managers of financially distressed firms use the choice of accrual accounting methods which gives them leverage to misuse their powers and expropriate stakeholders by showing good financial results. So, this study fills this gap by investigating the presence of Financial Distress (FD) and its effect on Earnings Management (EM) with the moderating role of Audit Quality (AQ). The sample of this study contains the data of 96 non-financial listed companies for the period 2017-2022 on the Pakistan Stock Exchange (PSX). This study uses the discretionary accruals as a proxy for the EM and Z-score for FD. The results and analysis find that FD and EM have a significant positive relationship, which reveals that corporate managers of distressed companies do EM while AQ weakens this relationship. This study recommends that professional bodies, regulatory authorities, and corporate governance institutions must design policies that restrict corporate managers from getting involved in earning management practices, especially in the time of FD.

In recent years, a company called Luckin Coffee in China got caught up in a big money scandal that shook both Chinese business circles and global financial markets. This study dives into what happened with Luckin Coffee, trying to figure out why it happened, how it impacted other companies, people who put their money in, and the whole market, and what can be done to stop such problems down the road. By going through different articles and reports, this study will thoroughly look into the backdrop and particulars of Luckin Coffee's financial mishap, and its repercussions both in China and on a global scale. The objective is to dig out the true causes of such financial wrongdoings and propose solutions for better oversight of company finances to prevent a repeat of such scenarios. Through an in-depth analysis of the financial fraud incident of Luckin Coffee, this research not only has important theoretical and practical significance for understanding and preventing financial fraud, but also provides valuable experience and lessons for financial regulatory agencies and enterprises, and promotes financial management and supervision.

Abstract In response to recent high-profile accounting scandals, the auditing sector is undergoing a critical review of practices. Despite regulatory changes and technological advancements, doubts persist about auditors' effectiveness in identifying financial statement fraud. This article advocates for a paradigm shift in auditors' skillsets, especially amid challenges posed by remote and hybrid work scenarios.

This research aims to find out the differences in perception regarding the ethics of thepreparation of financial statements and accounting scandals and businesses in the accountingprofession between lower-level accounting students and top-level accounting students. Thepopulation in this study is students of Accounting Study Program S1 Bandung lower level andtop level of 106 people with purposive sampling techniques. Data collection techniques usingquestionnaires. The hypothesis test in this study used an average independent T-test with thehelp of SPSS Statistics 25 software. The results of this study show that on the ethics of financialreport preparation, only misrepresentation factors do not have significant differences betweenlower-level students and top-level students. And there is a difference in perception on theunderstanding of the Accounting scandal between lower-level students and top-level students.

This study explores the different attributes of audit committees and boards of directors' effect on firm performance. Mainly the board’s size and independence and the audit committee’s employment, size, independence, financial experience, and frequency of meetings. This paper also talks about resource dependency theory which considers that. Non-independent directors have a positive effect on firm performance. On the contrary, agency theory suggests that the more independent the board is, the better the performance. Many accounting scandals and worldwide failures in corporate governance have occurred in the past few decades, affecting stakeholders and taking a heavy toll on national and global economies. After many infamous corporates, the United States passed the Sarbanes-Oxley Act (SOX), which acted to heighten the responsibilities of the board of directors in corporations, promotes fairness to both shareholders and stakeholders alike by enforcing listed companies to employ independent, knowledgeable, and proactive audit committees and directors and ultimately set the utmost importance on the protection of investors and stakeholders.  Taking a sample of 96 companies, the results show that a more extensive and independent board positively affects business results, and the same applies to the implementation of an audit committee. However, our results found no link between the different characteristics of audit committees with firm performance. The findings above give us insight into how companies’ governance operates.

Various accounting scandals involving the accounting profession are indicated because of the dominance of reason in accounting education. So, this research aims to understand and examine the perceptions of accounting educators about integrating Islamic values into accounting education. An interpretive perspective is used in this qualitative research. Data collection techniques through interviews. In-depth interviews were conducted with three accounting lecturers with open questions. Furthermore, the results of the interviews were transcribed and analyzed using the Miles and Huberman model, namely data reduction, data presentation, and conclusion. Islamic values are essential to be integrated into accounting education. Integrating Islamic values in accounting education includes praying together before learning, reading Quran verses, and practising "olah rasa" in class. The research results prove that Islamic values must be integrated into accounting education.

Accounting plays a significant role in the contractual relations that form the modern corporation, presumably to mitigate agency costs. However, it is argued that preparers are likely to have incentives to convey self-serving information is also likely to impose costs on financial statement users. This practice known as creative accounting which referring to the process of taking deliberate steps within the constraints of GAAP to bring about desired level of reported earnings. Even though not all accounting choices involve creative accounting or earnings management, and the term earnings management extends beyond accounting choice, the implications of accounting choice to achieve managers’ personal goals are consistent with the notion of earnings management. Accounting is a medium for managers to disseminate privately held information through accounting information releases, and the specific accounting method choice can play a key role in that communication process. In addition to that, regulation of accounting affects the quality and quantity of financial disclosures, and thus affecting the quality of decision making of the users. This paper critically discusses the common motivation, techniques, the implications, potential mitigation mechanisms as well as reviews some of the most controversial accounting scandals in Malaysia and worldwide. We conclude that earnings management are still a very common practice despite the current development in various mitigating mechanisms.

Management of operating cash flows before and after the scandals in the early 2000s: An examination of meeting or beating analyst cash flow forecasts*