Honors Theses
Date of Award
2012
Document Type
Undergraduate Thesis
Department
Accountancy
First Advisor
Dave Nichols
Relational Format
Dissertation/Thesis
Abstract
The purpose of this thesis is to determine if the economic downturn from 2007- 2009 had any significant influence on company’s ability to estimate bad debt expense, and to examine if there were any noticeable trends of earnings management. The estimates that companies use for their estimated allowance for doubtful accounts are largely unregulated and subjective, and therefore are more easily manipulated. This point is illustrated in the Statements on Auditing Standards number 57.4 by saying, “As estimates are based on subjective as well as objective factors, it may be difficult for management to establish controls over them. Even when management's estimation process involves competent personnel using relevant and reliable data, there is potential for bias in the subjective factors.” This potential for bias can manifest itself into a manipulation of earnings and also fraud. This thesis explores the fundamentals behind the reporting of the allowance for doubtful accounts, write offs, and bad debt expense accounts. In addition, this thesis utilizes analytics and trend analysis of public companies account balances during the period from 2005-2009 to examine any possible trends including, but not limited to, earnings management and fraud.
Recommended Citation
Neyhart, David McArthur, "Assessing Companies Allowance for Doubtful Accounts: Earnings Management and The Recession" (2012). Honors Theses. 2078.
https://egrove.olemiss.edu/hon_thesis/2078
Accessibility Status
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