Creative accounting

ethical issues of creative accounting 1.1 Introduction Creative accounting is also called “Earnings management” which is known as the manipulation of financial information. The term can be defined in many ways. Initially we define it as 'a process whereby accountants use their knowledge of accounting rules to manipulate the figures reported in the accounts of a business ' (Naser, 1993, p.59). Creative accounting, at root, is the origin of numerous accounting frauds. Many accounting scandal cases

Although the relevant accounting and financial standards, regulations, and frameworks are established for the fair and reliable presentation of financial reports, there are still fraud issues from manipulating financial information. Due to the recent global economic crisis, corporates tend to use creative accounting to maximise their profit and financial performance, and it seems to result in some serious financial frauds. A lot of questions come up with this creative accounting technique as well as

perceived the various methods of creative accounting can be considered to fall in four categories: I There are different options to choose accounting methods sometimes like in many countries for example; a company is allowed to choose between a policy of writing off Research and Development expenditure as it occurs and amortizing it over the life of the related project. A company can therefore choose that accounting will give them preferred image. II. Some entries in accounting involve an unavoidable degree

Basically, creative accounting does involve some manipulation in financial statements, especially in the balance sheet. It can be simply means income or earns something. Creative accounting will always be reflected in financial indicators and fundamentally the factor of company solvency, doesn’t matter what is the reason of it. This is because not everything that looks like profit is really a profit. The benefits and drawbacks of creative accounting are vary with different scenarios. Although most

begin the review process there should be some knowledge of the processes and procedures in the accounting department. It may be a good idea to observe all of the procedures that go into creating the financial statements. Look for any weaknesses or questionable practices and create a list of questions. Then in the next phase the auditor can conduct interviews to get a better understanding of the accounting staff. Observations and interviews can set the groundwork and provide information into any

obligated to do in a professional disciplinary or a particular domain of action. Ethics in Accounting Accounting is a business field in which accuracy and interpretation are both very important. It requires that Executives display leadership, honesty, and loyalty to employees and shareholders. Ethics in accounting, is the practice of behavior that does not allow for intentionally inaccurate or false accounting practices. This means not only must an accountant follow the law, but also be able to interpret

EXPLAIN THE RESPECTIVE ROLES AND RESPONSIBILITIES OF MANAGEMENT AND AUDITORS IN THE PREVENTION AND DETECTION OF FRAUD. The primary responsibility for fraud detection lies with management. This arises due to a contractual duty of care. Directors are able to discharge their duty toward prevention and detection of fraud and error in many ways, for example: * Complying with the Combined Code on Corporate Governance * Developing a code of conduct, monitoring compliance and taking action against

Toshiba seemed to be a very successful company with high profits for about seven years in a row. However, during this time a scandal was occurring where the upper management team members pocketed millions of dollars. Toshiba practiced unlawful accounting practices and over estimated their future profits. This scandal is an example of improper use of internal control and the misuse of the path-goal theory by over stating goals, which management knew employees would not be able to accomplish without

CAUSAL EFFECT OF CREATIVE ACCOUNTING ON FINANCIAL REPORTING AND DECISION MAKING. (A Survey of Selected Financial Institutions in Nigeria)-jetibensi@yahoo.com By: Jackson Etibensi A Concept Note Submitted to the University of Calabar, Graduate School as Prerequisite for Admission into MSc. Accounting, Faculty of Management Sciences. INTRODUCTION: Financial Statements provides information that is used by interested parties (users) to assess and appraise the performance and financial Status of

review before proceeding with the bid. The information covered will include: * The effect of occupational fraud and abuse on the company * U.S. governmental oversight of accounting fraud and abuse and its effect on the company Potential corruption schemes to be aware of in the company Recommendation of types of accounting evidence and methods of gathering such evidence to support the financial status review. Fraud deterrence occurs in several stages, and the key is to know that prevention is