Question

1. Is it right to manipulate financial statement? If management manipulates financial statement, is it good for shareholders? Why or why not?

Answer 1

Manipulation of financial statements is unethical and illegal. Window dressing of the financial books of accounts can be done in a number of ways but this is not allowed. Many a times manipulation of financial statements is done to save taxes or to mislead the stakeholders of the company. It may be done to increase the share prices and in other words to give an untrue picture about the state of affairs. Hence this is not good for the shareholders because it misleads the stakeholders of the company. Both internal and external stakeholders may make incorrect decisions based upon the manipulated financial statements. This is not good for the health of the business and is unethical as well as illegal.