Chapter 23

Conclusion – Looking Backwards and Forwards

Michael Jones

This book has provided an overview of international accounting scandals. It shows that accounting scandals have always been with us, from Mesopotamia in the third millennium BC, to the South Sea Bubble in 1720, to Enron and Parmalat today. Accounting manipulations generally form a crucial part of such scandals. Management may use creative accounting which, in effect, bends the spirit of existing Generally Accepted Accounting Principles. Alternatively, management may doctor the results – performing illegal activities or stepping outside the regulatory framework. This chapter will first provide a brief overview of the contents of the book, focusing on creative accounting and fraud in the past and present. Then it will look at some lessons that can be learnt. Finally, it will provide a prognosis for the future.


In the first part of the book, the themes underpinning creative accounting and fraud are explored with reference to the prior literature and to past accounting scandals. The differing self-interest of the main actors in creative accounting (managers, investment analysts, auditors and regulators, shareholders, merchant banks and other users) was examined in order to see those who would benefit and those who would be harmed by creative accounting. In addition, the incentives for creative accounting and fraud were explored. Personal incentives for managers ranged from increasing their salaries ...

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