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Accounting rules have become highly complex, even confusing. Like alcohol prohibition laws, they are easily evaded. Some companies evade them to improve accuracy, while others do it to artificially inflate their earnings. Slightly altering the nature of a transaction can generate a unique set of circumstances not covered by the overly specific accounting rules. By micromanaging accounting standards, the government has merely encouraged firms to expend resources restructuring their transactions to achieve accounting results that conform technically to the rules. Granting the SEC more power, larger budgets, and staff will not solve anything, because accounting rules cannot possibly keep up with rapidly changing events in business.
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