It Depends on the Implications of the 'Error'
Jagdish B Acharya, Consultant, India, Premium Member
There is a hierarchy in accounting "errors" along following lines:
1. Minor error of omission
- impact is negligible on share value
2. Error of commission
- here it becomes serious. Even if it is for window dressing, it may be considered unethical. The penalty may depend on its impact on share value.
3. Wrong classification of assets and stocks
- it can have big impact on share value and will be taken as unethical. In some cases it may escape as error in accounting practice or judgement.
4. Misclassification of current assets or withdrawal of money
by such means. - may be considered fraud and dealt with accordingly.
By adding one additional team of independent governmental auditors risk of such practices may be minimised.