accounting information is basically the accounting surrogate used by decision-makers who can not rely on directly observed events. A manipulation of these surrogate provides decision-makers with opportunity of sending the kind of signals that shape people's perceptions of managerial performance, which is made possible by arbitrary, complicated and misleading rules. The selective financial misrepresentation hypothesis, as advanced by Revsine, maintains that "the problem is not accidental, but instead results from contrived and flexible reporting rules promulgated by standard setters who have been 'captured' by the intended regulatees and others involved in the financial reporting process. The "capturing" refers to the process where the main objective of regulation, which is the protection of consumers, is reversed to make the regulatees the beneficiaries. The selective financial misrepresentation hypothesis is assumed to be across both public and private sector "since participants in both the sectors are motivated to support standards that selectively misrepresent economic reality when it suits their purpose". It applies to managers,shareholders,auditors and standard-setters