One of the functions we wanted financial statements to do is to reflect the outputs of management application or the managers responsibility about the resources provided with them. The users of financial statements often want to evaluate managers towards their economic decisions adoption. These economic decisions are include: the sale of investment in a commercial unit or not, and electing or replacing the managers. They will accomplish making these decisions using financial statements. These statements includes, for instance, the income statements which has an important place in evaluating process, reflects the commercial unit s function, and implies the efficiency resulting from resources managed. Since it is to the managers providing the financial statements, naturally regarding the interests contrast theory, they may have enough motive to manage earnings of their firms.

There are various factors may lead to the earnings management in a commercial unit. They include factors such as debt contracts, political costs, management compensation, external or internal finance, and ownership structure. Since the economic, social, and political conditions, and also Iran accounting standards differ from those of western countries, it is most possible that the motives to manipulate accounting numbers in Iranian firms differ also from those of western firms.  

Earnings Management , Discretionary Accrual,    Non Discretionary Accrual, Manipulating Earning