In five pages this paper discusses the flaws that still exist in the ways earnings are reported within the context of Arthur Levitt's The Numbers Game. Three sources are listed in the bibliography.
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win which the company manager perceive them and wish them to be presented. These variations may all be seen as within the guidelines, however, we may also argue that where
a specific approach is sought a firm may go shopping for auditors that agree and are prepared to consider the same approach, even thought this maybe ethically questionable at times.
Management may not be those to whom the auditors are finally responsible, being one of the checks and balances in place to protect the shareholder, yet in practice it is
the management of the company that the auditors will deal with and be paid by. This dichotomy is one aspect of a system that can be seen ad facilitating a
culture where earnings may be misrepresented. If we consider the report of Arthur Levitt in 1998 and remember the collapse of Enron in 2002, then the problems appear to
remain. If we understand that in a changeable and volatile environment, where information, by its nature is already historical and out of date by the time it is read by
investors, then we can appreciate the need to reduce the level of abuse that the current flexible system gives to those who may wish to mislead. There has been
concern for a number of years regarding the way that earnings are reported. The Chairman of the SEC; Arthur Levitt, has looked into this extensively and the speech that was
made, entitled Numbers Game at the NYU Center For Law And Business, in 1998 can be seen as highly critical of the practices in this area. The system of
the earnings reports must be seen as transparent to ensure the integrity of the stock market, and as such it was an issue that needed to be dealt with otherwise