Contemporary Issues in Accounting Research Essay

Contemporary Issues in Accounting Research - Essay Example Defenders of financial reporting, on the other hand, said that the accounting standards did not cause the crisis; instead, bad credit management and illiquidity were the primary suspects for the financial crisis. Ignoring everything else, did financial reporting really cause the crisis? Or was it just a convenient scapegoat for those who really caused the crisis? This paper attempts to answer whether or not financial reporting really caused the financial crisis, in part or in whole. Defined by BusinessDictionary.com as a â€Å"period of general economic decline†, the world has seen higher unemployment rates, sluggish wages and decline in sales in the retail industry because of this financial recession. It also started a widespread blame game as to what or who caused the crisis. In a poll conducted by Time Magazine, there are said to be 25 people to blame for the crisis, including former US presidents, government officials, regulators, heads of financial institutions and even, the American consumers. In a March 31, 2009 article by MarketWatch.com, 80% of those who responded on the survey conducted by MarketWatch said the blame should be â€Å"on banks and other financial institutions†. Other people says that â€Å"economists must bear blame for recession† (Skidelsky, April 25, 2009) because of their push for deregulation and free market. Still others blame accounting rules; particularly the â€Å"mark-to-market accounting† (Kestenbaum , Oct. 29, 2008) rule, which when applied to the financial statements caused the financial position of the company to go down. Is financial reporting the reason behind the current financial crisis or the global financial recession? The straight answer from this writer is NO, financial reporting did not cause the crisis. However, to give weight to both sides, the following is a brief discussion on why experts think financial reporting is or is not to blame for the