Question 1
The paper has explored various ways in which the accounting figures can be adulterated to reflect the will of the managers and not the true and fair view of a company's financial position. As a response to these irregular book manipulation methods, the international accounting bodies have operationalized several rules to close the reporting loopholes. However, as they address one problem, another crops up, enabling managers to play around with the books and the corporate decisions to fit their objectives. Since the renowned corporate collapsing cases of Enron and WorldCom, the occurrence of such high magnitude failures has reduced, but that does mon mean managers are not manipulating companies' financial reports. From the article, the two accounting problems, 2 and 5. Problem two is revenue recognition, while problem five is cooking decisions, not books.
According to GAAP provisions, firms cannot report revenues that cannot be determined objectively beforehand (Sherman, 2016) . However, this rule has the unfortunate consequence of influencing the way business is done, giving leeway to fraudulent practices for inflating periodical earnings. Since it is an issue of timing, a company experiencing dip in sales can record revenues earlier while delaying recording liabilities. For instance, in 2004, Krispy Krème Doughnuts, USA doubled the number of sales to its wholesale customers to record higher sales in a quarter to boost quarterly sales revenues only for the customers to return the unsold doughnuts at the beginning of the next quarter and claim refunds (NBC News, 2005) .
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Managers engage in "accounting games" by focusing on how costs are treated in the financial books (Sherman, 2016) . And because such games do not fall under any particular accounting standards, a manager can get away with it. The most common way is to provide for bad debts or delay recognizing a liability or loss in the current period to report improved profits. It is an easier route for a manager to report improved earnings and save his job rather than facing scrutiny from investors due to depressed earnings.
Question 2
It is critical to have all group members read the article on their own and keep short notes on key points shared during a group discussion forum. In the forum, the group members share their points, brainstorm the discussion question, and draft the best response. The contribution of each member is critical to the group's success, and its importance cannot be underscored.
References
Krispy Kreme to restate some 2004 earnings . NBC News. (2005).
https://www.nbcnews.com/id/wbna6784620 .
Sherman, D. (2016). Where Financial Reporting Still Falls Short . Harvard Business Review.
https://hbr.org/2016/07/where-financial-reporting-still-falls-short# .
