Abstract
Aggressive accounting, income smoothing, earning management and creative accounting are the financial reporting gimmicks that have influence on the differences in the approaches adopted by accounting practitioners in reporting business income and thereby influencing reported income. The difference accounting policies and approaches adopted by preparers of financial statements create differences in the measurement and assessment of business income through provision and loopholes in International Financial Reporting Standards (IFRSs) that lead to manipulation of financial numbers usually within the letter of the law and accounting Standards. Creative accounting practices employed by preparers of financial statements have created gap in the measurement and assessment of business income and performance due to the selfish interest of few stakeholders to the detriment of the larger society. principles-based accounting is the best in providing relevant, reliable and comparable financial information across reporting period and entities but it is to be recognized that to make principles-based approach more effective and efficient, some grey areas must be modified to avoid the risk of exposing financial information to manipulation through unethical behaviours. Cash flow is more reliable to access and measure entities performance because it is more difficult to manipulate than statement of financial performance and financial position. Keywords: Creative accounting; Income measurement; International Financial Reporting Standards (IFRSs); Rules-based accounting; Financial Statement; Principles-based accounting. DOI : 10.7176/RJFA/10-18-11 Publication date :September 30 th 2019
Highlights
Business growth in a developing economy is largely depending on the extent of the deployment and utilization of their resources human, capital and otherwise in order to maximise profit of the firm
The differences accounting policies, approaches and procedures adopted by accounting practitioners and preparer of financial statements in the measurement and reportage of business income create wide differences in the measurement, assessment and interpretation of business income through provision and loopholes in International Financial Reporting Standards (IFRSs) that gave opportunity for both macro and micro manipulation of financial information usually within the letter of the law and accounting Standards
Creative accounting practice employed by preparers of financial statements has created wide gap in the measurement and assessment of business income and performance due to the selfish interest of few stakeholders to the detriment of the larger society
Summary
Business growth in a developing economy is largely depending on the extent of the deployment and utilization of their resources human, capital and otherwise in order to maximise profit of the firm. The records will be such that will be able to disclose with reasonable accuracy the financial position of the company at any time They shall be such that will enable the directors to be able to prepare financial statements that will comply with the requirements of Companies Act as to the form and content of the company’s financial statements. Section 334(1) of CAMA, 1990, states that it is the duty of the directors of the company to prepare annual accounts at the end of each financial year of the existence of the company Preparations of these financial s are statement r Accounting regulated by various Acts and Standards
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