Questionable accounting on the decline

Questionable accounting, Long Island is familiar with that. We’ve seen Sanjay Kumar go to jail for his part in accounting fraud at CA Inc. David Brooks, former chief executive of DHB Industries has yet to face the law for his part in the accounting troubles at the body armor maker, but that didn’t stop the board from booting him and moving the company to Florida. And Kobi Alexander, another chief executive accused of fraud during his reign at Comverse Technology, has even fled the country.

However, NFI Research says that kind of tomfoolery is on the decline. According to its survey of senior executives across the country, only 50 percent of executives asked think questionable accounting is common. In 2005 it was higher, as 60 percent of execs said they thought questionable accounting was common. And in 2002, that number was 66 percent.

This type of bad business didn’t come about on its own. According to the survey, 74 percent of executives and managers think pressure to post strong earnings is the leading cause. Though, there are other causes.

From the statement:

Forty-eight percent of business leaders today blame a lack of ethics as a leading cause to practice questionable accounting. Thirty-nine percent say pressure from top executives is the leading cause, while 34 percent list lack of oversight by board of directors.

Competitive pressure (29%) and honest mistakes (24%) were at the bottom of the list of leading causes.