Financial Reporting Fraud Essay Example | Topics and Well Written Essays - 1000 words

Financial Reporting Fraud - Essay Example There are four constraints stipulated in the GAAP. The objective principle which states that the information provided by an account in the financial statements should be based on tangible evidence. There is the materiality principle which says that an item should be reported in the financial statements on if it is capable of affecting decision making of the user of the statements . The consistency principle requires a company to use the same accounting principles, guidelines and methods in the preparation of the financial statements from each period to another.   However, fraudulent company employees and executives with the intention to swindle the company some funds or for personal gain consciously circumvent the aforementioned assumptions, principles and constraints. The methods involved are very complex and usually involves overstatement of revenue, understatement of expenses, misuse or misdirection of funds, misreporting of the assets and liabilities of the company. This is wha t is referred to as financial reporting fraud.  To obtain additional funds from a financing institution such as a bank, to report unrealistic profits and hide losses so as to evade accountability by the top executive of the company, attract customers and investors by making the company to appear more successful than it is, to achieve a performance related bonus or incentive by the employees and to conceal theft either by the employees or the company executive. An example of a major accounting scandal in the United States is the Enron Scandal.

CoverGirl Cosmetics Research Paper Example | Topics and Well Written Essays - 500 words

CoverGirl Cosmetics - Research Paper Example Since, strong support of P&G is still behind the Cover Girl therefore this brand is still available in the shelves of cosmetics stores and is not seriously exposed to the risk of disappearing from make-up and cosmetics market. Since Cover Girl is among the umbrella of P&G’s billion dollar brands, therefore, the beauty sector of P&G which certainly includes Cover Girl as part of its beauty section. Overall if the beauty section of P &G is observed, this particular section has generated billion dollars brands which are truly the global market leaders in today’s beauty industry. Olay, Pantene, Head & Shoulder and several other brands contribute remarkably well in reflecting a beautiful picture of financial statements of P&G. These famous brands are the core cause behind this sound financial position of P&G. If some of the relevant ratios are taken into account in respect of beauty products of P&G, two ratios are highlighted in the financial statements of P&G for the year 2011. These two ratios are percentage of Net Sales and Percentage of Net Earnings. Coincidently, the value of both these ratios is computed to around 24%. If these ratios are analyzed in a bit detail, then it can be observed that P&G generated the sales of around $82.5 billion in the year 2010-11. Among these sales, 24% is contributed by the beauty products that P&G manufactures, which is the most revenues created by any sub-part of P&G. This shows how highly P&G is dependent on the beauty segment. Another ratio reflects the percentage of profitability that beauty segment earned in the period 2010-11 which is again 24%. This 24% means that among the profits of around $11.2 billion, 24% profit is earned due to the sales of beauty products of P&G. This clearly presents the importance of beauty products in the portfolio o f P&G. Since the Cover Girl is still seeking its place among the billion dollar brands, therefore, further 5 to 10 years might be needed for Cover Girl to grow on a bigger stage