Off-balance sheet financing is potentially a serious problem as a tool to misstate financial statements. Furthermore, the problem is not likely to be easily resolved with deteriorated ethics in the US corporate world. (Remember balance sheet management and off balance sheet financing are not inherently bad management tools).
Given the current state of affairs, what do you think can be done to manage the potential risk to the financial statement users of off-balance-sheet financing being employed to misrepresent a company's financial position?© BrainMass Inc. brainmass.com October 25, 2018, 7:44 am ad1c9bdddf
Given the current state of affairs, users of financial statements cannot entirely eliminate the potential risk off-balance sheet financing being employed to misrepresent a company's financial position. However, by carefully studying the financial statements of the company the investor or other users of the financial statements can estimate the level of off-balance sheet financing being employed by a company.
One approach that users of financial statements can take is to examine the footnotes of financial statements. Usually, the existence of large non-cancelable operating leases indicates the existence of ...
This posting gives you a step-by-step explanation of off-balance sheet financing. The response also contains the sources used.
Off balance sheet finance as a financial reporting practice is unethical
Reasons and justifications for the extensive use of Off-Balance-Sheet Financing in financial reporting .
How does off balance sheet finance exactly work? Give examples.
Even though SPE's are legal ways of setting up partnerships, how was the way Enron used them highly unethical?
How has IAS 10 IAS37 or other accounting regulations aided the situation / or not?
Can there be a balance between reports that are 'fraudulent' and reports that are more 'subtle' ? How does company achieve that? what is the difference in regards to the way they take of their financial statements?
I know some supporters of this practice claim that it permits companies to benefit from business opportunities that would not otherwise be available. but what sort of business opportunities? Examples?
Some say OBSF restricts the usefulness of financial statements, where do we draw the line?
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