Hcs 405 Week 2

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Reporting Practices and Ethics Week 2 HCS/405 Lisa Sanders August 24, 2012 Katrina Self Accounting Principles Each organization usually has generally accepted accounting principles which is known as GAAP. GAAP is considered to be standards and principles that companies use to compile their financial statements. This generally means that the organization itself has some consistency in financial statements that are reflected on revenue recognition, balance sheets, and share measurements. In doing research, multiple financial reporting practices shared within this paper have used the four elements of financial standards, and complied to the procedures of fraud, abuse and ethics. Not all of the practices are known to have followed the four elements of financial management. The GAAP procedures of these elements show that it differs between financial…show more content…
Fannie Mae had manipulated accounting against the GAAP standards which made them collect millions of dollars. In not following the guidelines of accepted accounting principles, one accountant recorded in balance sheets undeserved bonuses. Not only did this accountant provide fraudulent information but abused the investors that have been with the company for years. The blistering report by the Office of Federal Housing Enterprise Oversight, the result of an extensive three-year investigation, was issued as Fannie Mae struggled to emerge from an $11 billion accounting scandal (Press, 2003). The fraud was done to provide higher executives within this company more bonuses starting at an average of $27 million in bonuses. Fannie Mae did not follow through with the generally accepted accounting principles which included the balance sheets and share measurements. This company itself showed very poor financial ethical standards which reflected on investors that invested double the amount of shares within the

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