NDLI: Ethical Issues in Financial Reporting: Is Intentional Structuring of Lease Contracts to Avoid Capitalization Unethical?

Content Provider	Springer Nature Link
Author	Frecka, Thomas J.
Copyright Year	2007
Abstract	Under present accounting rules, lessees frequently structure contracts for leased assets, in situations where they enjoy benefits similar to outright ownership, in a way that keeps both the leased assets and related liabilities off their books. This method of accounting creates off-balance sheet financing and is called operating lease accounting. The paper debates the ethicality of intentionally structuring lease contracts to avoid disclosing leased asset and liability amounts and describes the “slippery slope” of rule-based accounting for synthetic leases and special purpose entities, that, in the author’s opinion, led to the accounting debacles at Enron and other companies. The ethical intent that is implicit in the Securities and Exchange Commission and Financial Accounting Standards Board regulations is discussed and suggestions for improving the ethicality of financial reporting are provided.
Starting Page	45
Ending Page	59
Page Count	15
File Format	PDF
ISSN	01674544
Journal	Journal of Business Ethics
Volume Number	80
Issue Number	1
e-ISSN	15730697
Language	English
Publisher	Springer Netherlands
Publisher Date	2007-06-01
Publisher Place	Dordrecht
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	accounting accounting ethics ethics and lease accounting ethics of financial reporting rule-based accounting rule-based ethics Quality of Life Research Management Economic Growth Ethics
Content Type	Text
Resource Type	Article
Subject	Arts and Humanities Business and International Management Law Economics and Econometrics

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