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Misstatements and Executive Compensation

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- Discuss the nature of accounting misstatements and the implications of each to fair presentation of the financial statements.
- Discuss how the pressure to perform on Wall Street (short-term performance) may influence an organization decision to misstate its financial performance.
- Discuss how executive compensation being tied to financial performance may become problematic for an organization's financial results.

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- Discuss the nature of accounting misstatements and the implications of each to fair presentation of the financial statements.

When accounting misstatements take place, the main implication is that the financial statements present an inaccurate financial position for the company. This is problematic because investors, creditors, and other users of the financial statements are using the financial statements for decision-making purposes. The financial statements are therefore presented against all auditing assertions and are not in compliance ...

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This solution discusses the nature of accounting misstatements and implications of each to fair presentation of the financial statements. I also discuss the pressure to perform on Wall Street and its implications, and how executive compensation being tied to financial performance can be problematic.

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