As far as the world of Accountancy is concerned, revenue recognition has always been a complicated and highly prone to manipulation area.
To the writer of this paper, the case of hundreds of technology companies going bust in the dot com bubble makes an interesting case in point.Why did the Dot Com Bubble come about? Were lack of clear standards / generally accepted practice with regard to revenue recognition and the failure of auditors to highlight creative accounting practices a major contributing factor towards the crash? How have regulators, accounting standard setting bodies and the audit profession responded to this? Is there revenue recognition still in clouds of ambiguity? Are there sectors such as the technology companies of the Dot Com era that pose significant risk with regard to revenue recognition. What does this hold for our Capital markets?This research project will attempt to study the reasons for the Dot Com Crash and investigate whether the accountancy / audit profession was responsible for the USD 5 Trillion Dollar loss. The steps taken by the accountancy profession to safeguard the integrity of financial statements in the future and whether capital markets still stand at risk will follow this.
