Three Levels Of Earnings Management

Strategic earnings management refers to the realization of earnings management by means of overall strategic considerations and planning, supplemented by various means such as accounting policy choice, operation mode selection and financial arrangement.

Compared with the above three types of earnings management, strategic earnings management is not a new method of earnings management in essence.

When the existing core business is declining in the "tomorrow", the growth business of "today" will become the core business of tomorrow, and the seed business of "today" will also be pformed into "tomorrow" growth business, and will be ready to provide the basic cash flow for the enterprise to maintain operation on the day after tomorrow.

The strategic level of earnings management is applicable to diversified large enterprise groups involved in many fields and financial holding companies characterized by mergers and acquisitions.

The strategic level of earnings management will not touch the bottom line of the securities market regulators. The main points are reasonable combination of business and reasonable arrangement of business pactions and liquidation time.

According to the above four types of earnings management, we can divide the three levels of earnings management.

The first level is "beforehand earnings management", that is to say, we should first consider the purpose, means and channels of earnings management, and then plan and implement operations and financial activities in a planned way. In a long period of time (for example, GE's industrial arrangement based on earnings management often takes several years), we can reasonably control the time and mode of occurrence of business activities and gradually realize them.

Objective.

The strategic surplus management mentioned above is the same.

The second level is "

"That is, in business or

In the process of occurrence, through some means to influence the way of occurrence, achieve the purpose of earnings management.

Earnings management and financial surplus management in the above are the same. Compared with the previous earnings management, the earnings management is often aimed at a "point" and "solve the problem".

The third level is "post earnings management", that is to say, after the occurrence of business activities and financial activities, earnings management will be considered and passive accounting policies should be chosen afterwards to achieve the goal.

The effect of post - post earnings management will be discounted, and with the improvement and strict supervision of the accounting standards and the securities market, the space for the post - post earnings management will become smaller and smaller.

In general, earnings management is a systematic thinking rather than an accounting method.

The sound earnings management in the bottom line of policy is not a malicious accounting manipulation, but a necessary skill of management.

Earnings management requires overall consideration and comprehensive arrangement from the strategic level. It requires the comprehensive consideration and concern of the person in charge of the enterprise, not just the financial department.