Earnings Management During Import Relief Investigations
“Earnings Management During Import Relief Investigations” was written by Jennifer J. Jones. It illustrates her study and examination of the effects of managing reported earnings to alleviate the costs of tariffs and quota increases on import businesses. The ITC or (United States International Trade Commission) conducts relief investigations on companies that import goods so they can make a determination on the import relief rate. The ITC sets the import relief after reviewing a plethora of factors. Some factors include the profitability of the industry and the trends in profitability.
Import relief is described as a set of federally imposed regulations which are designated to …show more content…
The managers of the import companies are responsible for the manipulation of accounting numbers. It is only natural for managers to protect the interest of the company.
However, many consider the manipulation of accounting numbers to influence the import relief to be unethical. On the other hand many theorists believe that the import relief is an unfair tariff on import companies. Politics play a major role in the creation of the import relief. Some theorist claim that politicians who are influenced by large companies can affect the decision making process of the ITC investigation. Because the import relief is based on many different factors the manipulation of reported income could possibly be an unnecessary. In addition, accountants who engage in the manipulation of earnings can face legal penalties for falsifying accounting numbers. The SEC should investigate the accounting books of import companies to discover falsifications before they can affect ITC’s investigation and decision. It is not addressed why auditors do not report earnings manipulations. It is possible that because of the adverse relationship by companies and their audit firms it is possible that the manipulations are discovered and hidden.
The author conducted her study of five import