Answer:
Accounting standards are the policies and principles of accounting. There are different accounting standards which can affect the amount stated as profit
The effect of increased fines is the increased transparency of the ethical practice and the increased obscurity of unethical practices in the accounting information
The reason for the above relation is as follows:
The increase in fines given to companies in the pharmaceutical industry
helps to reduce forms of marketing which are unethical, however the
amount in fines paid for corrupt practices is dwarfed by the major profit
and market share gained from such practices
The use of fines will encourage more transparency where the company is
ethically inclined to abide by the rules of marketing, such that payments to
doctors based on past misdemeanors . However, the making of huge large
profits by being involved in unethical practice may encourage accounting
practice that is focused on the profitability of the venture and therefore,
introducing increased lack of transparency on their financial information,
so as to reduce amount paid as fines
Due to the fines business, where the fines are lesser than the profit made,
increased fines within the pharmaceutical industry will lead to less
transparency in accounting information as firms try to further increase
profitability by incurring less penalties
Learn more about accounting standards here:
Explanation:
