Company collapses

Over the years, there have been many situations where companies have decided to inaccurately alter its reporting of costs and measurement of revenue in order to achieve a greater level of profitability on paper. This may have come as a result of the increased level of competition within businesses, which also brought about changes within organisations in general, with organisations looking to new costing systems such as Activity Based Costing (ABC) as a means to increase their levels of efficiency and profitability. Traditional costing systems were seen to be highly inaccurate due to the large focus on labour intensive jobs, however as of late, with the move to less labour intensive focused jobs, it has highlighted the importance of the management and accountant's role in reporting costs and measuring its revenue accurately and timely.
Although there are no enforceable rules, management and accountants are expected to present a true view of the business' financial position, in order to provide those involved with the organization a outlook on the state of the business and the level of profitability. With HIH not recording a great level of its costs, and including revenue in which it shouldn't have, this led to a great outlook on the organisation's financial position in which it really didn't have. Although this was good in the short run, it eventually led to the collapse of the business, because the way in which costs were reported, and revenue was measured was not acceptable.
Critically evaluate this statement: Since there are apparently no enforceable'standards' and rules for management and cost accounting, whatever the company and accountants want to do in reporting costs and revenue measurements must be acceptable.
Evaluating the above statement requires an in-depth look at the main features of the subject which include management and cost accounting. This essay attempts to highlight the…

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