Accounting Distortions


All firms need a good understanding of the deliberate and non-deliberate processes that lead to accounting distortions. This concept explains how these distortions arise along with their effects and presents case studies of firms that have experienced accounting distortions, as well as success factors and measures for avoiding distortions.

Technique Overview

Accounting Distortions

Accounting Distortions Definition

The term ‘accounting distortions’ refers to any kind of deviation and divergence between information reported by financial statements and the reality of the business (Gandevani, 2010). It is the process of using accounting alternatives (usually unintended alternatives within the accounting standard) inconsistently to increase or decrease the flow of items through the income statement (usually by affecting the timing of the flows) in order to increase or decrease reported profit for a specific period (Tosen, 2006).

Accounting Distortions Description *

* The full technique overview is available for free. Simply login to our business management platform, and learn all about Accounting Distortions.

Business Evidence

Accounting Distortions Strengths *

Accounting Distortions Weaknesses *

Examples of Accounting Distortions *

* The business evidence section is for premium members only. Please contact us about accessing the Business Evidence.

Business Application

Accounting Distortions Implementation *

Success Factors of Accounting Distortions *

Measures of Accounting Distortions *

* The business application section is for premium members only. Please contact us about accessing the Business application.

Professional Tools

Accounting Distortions Videos *

Accounting Distortions Downloads *

* The professional tools section is for premium members only. Please contact us about accessing the professional tools.

Further Reading

Accounting Distortions Web Resources *

Accounting Distortions Print Resources *

Accounting Distortions References (4 of up to 20) *

  • Bushman, R. M., and Indjejikian, R. J. (1993) Stewardship value of “distorted” accounting disclosure. The Accounting Review, Vol.68(4), pp. 765-782.
  • Catalano, V. (2006) Sectors and styles: a new approach to outperforming the market. Wiley Publications, USA.
  • Elmaleh, M. S. (2005) Financial accounting: a mercifully brief introduction. Epiphany Communications, MD, USA.
  • Erickson, M., Hanlon, M., Maydew, E. (2006) Is there a link between executive equity incentives and accounting fraud? Journal of Accounting Research, Vol.44(1), pp.113-143.

* The further reading section is for premium members only. Please contact us about accessing the further reading.


Learn more about KnowledgeBrief Manage and how you can equip yourself with the knowledge to succeed on Accounting Distortions and hundreds of other essential business management techniques

Other members were also interested in...

Related Concept: Neuroscience

Neuroscience offers a deep understanding of the way we think and act. Case studies present the solutions adopted by companies to implement these new findings in their organisation, improving performances and results.