Securities and Exchange Commission (SEC) filed charges and convicted multiple Merrill Lynch executives of aiding the fraud. Įnron had done exactly the same about 10 years earlier in their case, Merrill Lynch aided Enron in bolstering profitability close to earnings periods by willfully entering repurchase agreements to buy Nigerian barges from Enron, only for Enron to buy them back a few months later. Public prosecutors in New York filed suit against EY for allowing the 'accounting fraud involving the surreptitious removal of tens of billions of dollars of fixed income securities from Lehman's balance sheet in order to deceive the public about Lehman's true liquidity condition'. The scheme consisted of mis-reporting a Repo (a promise to re-buy a liability or asset after selling it) as a sale, and timing it exactly in a way that half of the transaction was completed before a profitability reporting deadline, half after-hence bolstering profitability numbers on paper. Lehman Brothers utilized repurchase agreements to bolster profitability reports with their Repo 105 scheme under the watch of the accounting firm Ernst & Young. Types/examples of creative accounting schemes Earnings management

Market and stockholder expectations of profits.Company managers who participate in creative accounting can have a variety of situational motivations for doing so, including: The underlining purpose for creative accounting is to 'present business in the best possible light' typically by manipulating recorded profits or costs. According to critic David Ehrenstein, the term 'creative accounting' was first used in 1968 in the film The Producers by Mel Brooks, where it is also known as Hollywood accounting. Newspaper and television journalists have hypothesized that the stock market downturn of 2002 was precipitated by reports of 'accounting irregularities' at Enron, Worldcom, and other firms in the United States. 'Creative accounting' has been at the root of a number of accounting scandals, and many proposals for accounting reform-usually centering on an updated analysis of capital and factors of production that would correctly reflect how value is added. The term as generally understood refers to systematic misrepresentation of the true income and assets of corporations or other organizations. Ian Griffiths in 1986, describing creative accounting In fact this deception is all in perfectly good taste. It is the biggest con trick since the Trojan horse. .

The figures which are fed twice a year to the investing public have all been changed in order to protect the guilty. Every set of published accounts is based on books which have been gently cooked or completely roasted. 'Every company in the country is fiddling its profits.

Accounted for synonym