Aggressive earnings management – a threat to corporate reporting

 A report published by the Institute of Chartered Accountants in England & Wales (ICAEW) warns that the threat of aggressive earnings management to UK corporate reporting is likely to increase with the introduction of International Financial Reporting Standards (IFRS).

?Aggressive earnings management’ refers to using accounting policies and stretching judgements of what is acceptable to present corporate performance in a more favourable light than the underlying reality. The survey of anonymous interviews with audit partners, finance directors, audit committee chairmen, investment analysts and senior financial journalists found that aggressive earnings management, while perceived as less of a threat than in 2001, ?will always be with us’.