Black Box Accounting

Black Box Accounting: good or bad?

I would like to start by saying that just 30 years ago, the set of rules governing corporate accounting in the USA would fill no more than three volumes and would fit in a briefcase of any corporate workers. Since then, nevertheless, the financial and accounting standards have increased so rapidly that it currently takes over a bookcase shelf and probably a long one to hold all the volumes which account for over 40 volumes.

“As the collapse of Enron has made painfully clear, the complexity of corporate accounting has grown exponentially” (WSJ, p.C1). One should remember that things that were at one point of time simple and objective concepts, like sales, expenses, assets and earnings, in many cases have nowadays  become complex and prejudiced.

I also learnt that many companies disclose as little as possible or as little as permissible by law, and most of the financial reports of an ever-growing number of the USA and European companies have become hidden and very confusing for the accountants and auditors. I would like to note that this confusion is considered to be true not just for corporate investors, but also for the Wall Street analysts, various corporate executives, auditors, and managers with master’s degrees in business administration, finance and accounting. Oftentimes, even the outside auditors reviewing a company’s books get confused because of the various loopholes that companies use to circumvent the law.

I have learnt that even after a disclosure, the numbers that some companies report are based on accounting methodologies so complex, involving such a high degree of guesswork, that it can’t easily be determined precisely how they were arrived at all. And just because difficulty n understanding does not always entail something fraudulent, various companies use this cooking the books process to alter the numbers and make them much appealing to the Wall street analysts.

The bottom line I learnt from this Wall Street Journal Article is that there is a lot more open to interpretation when it comes to the corporate bottom line.”


“Deciphering the Black Box: Many Accounting Practices, Not just Enron’s,  Are Difficult to Penetrate.” By Steve Liesman. Heard on the Street. The Wall Street Journal. January 23, 2002, p. C1.


This was an article review about Black Box Accounting. For professional help with article reviewspersuasivereflection and rhetorical as well as for any other academic assistance, please, place an order.

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