Creative Accounting Practices Research Articles

Creative accounting and its influence on corporate performance and financial reporting: A case study of Kosovo

As it is known, Kosovo is a newly established and developing country. Naturally, creative accounting practices in Kosovo are becoming more frequent due to gaps and weaknesses in management and audit quality. This study aims to examine the relationship between creative accounting and corporate performance and management, as well as the impact of managers’ ethics including audit period on financial reporting and creative accounting limitation. The study adopted a survey-based approach. The questionnaires were distributed among 159 managers, auditors, and head accountants. Linear regression was used to analyze the hypotheses. The research results confirmed the rejection of the first hypothesis, as the mean is less than 3 (the average on a five-point Likert scale). The results confirmed that creative accounting has a significant impact on corporate performance. The results also confirmed the second hypothesis as the mean is greater than 3.5 (the average on a five-point Likert scale). Thus, managers’ ethics have a significant effect on the reliability of financial statements. In addition, the research results confirmed the acceptance of the third hypothesis, as the mean is greater than 3 (the average on a five-point Likert scale), thus there is a positive influence of the audit period on creative accounting limitation. The study found a negative impact of creative accounting on corporate performance. Furthermore, a significant effect of managers’ ethics on financial statements’ reliability was concluded; and finally, the findings concluded that audit period and quality could significantly contribute to the creative accounting limitation.

Creative Accounting Practices and Its Impact on The Reliability of Financial Statements

Creative Accounting Practices and Its Impact on The Reliability of Financial Statements

The Role of Internal Audit Quality in Reducing Creative Accounting Practices in Light of International Auditing Standards

The study aimed to identify the impact of the quality of internal auditing in limiting creative accounting practices in light of international internal auditing standards from the point of view of practitioners of the profession of auditing and accounting in Algeria, and to achieve the objectives of the study, a questionnaire was designed based on similar previous literature. The study found that there is a positive and significant statistical impact of the quality of auditing in reducing creative accounting practices, and the quality of internal auditing in the absence of internal auditing standards affects massively compared to the application of internal auditing standards from the point of view of the vocabulary of the sample

Level of usage of income smoothing as a creative accounting tool by Balkan banks

The main objective of this study is to find out if Balkan banks use income smoothing (IS) as a creative accounting practice. The IS level is analyzed to see whether banks are focused on these practices as a tool to produce a better picture of financial views in the sight of decision makers. The data are provided from the audited financial reports presented on the banks’ web pages. Eckel’s modified equation was used to find out if banks use the technique of IS. As a result, the findings showed that banks use IS, and the factors that influence the use of this practice are analyzed. The factors studied are: age of banks, profitability, and loan provision. Of a total of seven banks in Kosovo, only three use income smoothing. In Albania, of a total of 11 banks, only one uses income smoothing. Surprisingly, the results show that none of the variables measured affect the usage of income smoothing. The study contributes to understanding the practice of IS on the one hand, and on the other hand, to opening the eyes of investors and depositors promoting vigilance when they make decisions about investing their funds in banks.

An Exploratory Discourse of the Operational Connection between Corporate Governance and Creative Accounting in Oil Company Administration in Nigeria

This paper delves into and illuminates on the practices and successes of new and creative governance and accounting practices in Nigeria's oil and gas industry. The purpose of the paper is to find the nexus between corporate governance and creative accounting in Nigerian oil companies. It highlights various management concepts and facets of corporate governance in the Nigerian context that are immoral, but done in the interest of profit maximisation. The study also curiously documents how corporate governance affects the business model of Nigerian companies. This is mostly a doctrinal research that relies heavily on secondary data as obtained from available literature on creative accounting and corporate governance. Finally, there are several corporate governance procedures used in the oil and gas sector of Nigeria which often heavily reflects poorly on the efficiency of the firms, most notably the enforcement of criteria and metrics and their participation in decision-making. Often, the examination of calculation methods, their implementation, their outcomes, and their practical applications in the market environment. It is, without doubt, the reality that Nigerian companies, particularly those in the oil industry, are enmeshed in the practice. The paper finds that there is no guarantee those who are in charge of corporate governance who employ creative accounting will be able to do the best they can to create strategic and financial performance for Nigerian firms, most especially as better decisions are needed for stimulating the economy and recommends that ethical conduct, organizational transparency, accountability and probity be inculcated as an integral policy architecture for corporate governance in Nigeria's oil industry whilst advocating that the concept of separation of powers must be adopted to corporate governance if sustainability, lack of corporate impunity and a culture of unethical conduct in the boardroom would not be perpetually occasioned.

Impact of Corporate Governance Mechanism in Mitigating Creative Accounting Practice of Listed Conglomerate Companies in Nigeria

This study examined the impact of corporate governance mechanism in mitigating creative accounting practice of listed conglomerate companies in Nigeria. The study used Secondary data obtained from the company’s annual reports and accounts for the period 2013 to 2020. The population of the study includes six conglomerate companies listed on the Nigeria Stock Exchange and the entire population was used for the study. The dependent variable creative accounting was measured using discretionary accruals as estimated by modified Jones model. The independent variable corporate governance mechanism was proxied by audit committee, board size, board independence, managerial ownership. Multiple regression technique was employed for the panel data analysis using Stata version 13 statistical tools. Findings of the study revealed that audit committee has negative significant impact on creative accounting practice. Managerial ownership has significant positive impact on creative accounting practice. Board size and board independence has no significant impact on creative accounting practice of listed conglomerate companies in Nigeria. The study concludes that good corporate governance have impact on creative accounting practice. Based on these findings, the study recommends that companies are to effectively apply good corporate governance mechanism. They should have an independent audit committee, so as to minimize creative accounting practice.

A Study of the Structural changes in the accounting environment as an introduction to the Practice of creative accounting

This study aims to address the structural changes in the internal and external accounting environment and its role in creative accounting practices. The study problem has been represented in the structural changes of the accounting environmental factors that control the behavior and the profession ethics. The anomaly it causes is exploited as an entry point for creative accounting practices. The study has found a relationship between the structural changes in the accounting environment and the creative accounting practices. Chi square statistic reported is28.27 with 28 digress of freedom accompanied by a probability of 0.55 which means a relationship is available. The study recommends the necessity of becoming accustomed to the changes in the accounting environment so as not to affect negatively the accounting practices. In addition, attention has to be paid to the awareness of the risks of creative accounting practices and the commitment to the acknowledged accounting practices.

The Role in Reducing External Audit of Creative Accounting Practice of Financial Statements and their Impact on the Auditor's Report – An Empirical Study of a number of Saudi companies to contribute to the stock market –: دور التدقيق الخارجي في الحد من ممارسات المحاسبة الإبداعية وأثره على تقرير مراقبي الحسابات – دراسة تطبيقية لعدد من الشركات السعودية المساهمة في

The science of accounting principles and profession internationally recognized standards (GAAP) must therefore abide by to maintain the confidence gained during the many decades of time and place that it reached this profession needed interesting the Internal and external Audit. The economic collapses of the firms in the world have impacted negatively on the confidence in the profession and its principles and standards. In this context we reached the following results: The importance of the moral dimension of accountants because of built decisions on the results of creative accounting practices and the importance of credibility in the financial statements and this does not mean that the importance of the artistic dimension to the accounting profession, The methods used in the creative accounting in the companies under study of relatively great importance on the credibility of the financial statements by the standard used to study, Observed convergence in consensus that the study sample agree that creative accounting methods have an impact on the credibility of the financial statements and that there was no significant dispersion in the answers of respondents and this shows the negative impact on businesses and the economy in general as a result of these practices. The main recommendations researcher: The need to identify all the creative accounting practices in order to find appropriate solutions., The necessity of activating the awareness of the ethical dimension of the accounting profession as it has the greatest impact in the production of lists of highly credible financial benefit to the economy in general and on the relative development and continuation of the companies., The necessity of activating the powers granted to external auditors and develops pieces of legislation governing the work of accounting so that they can adjust the fraud, manipulation and detection of errors., The need to adjust and legalizing illegal practices of creative accounting and modernize the laws regarding legal practices because of their relatively great importance.

THE EFFECT OF KNOWLEDGE OF ETHICS, RELIGIOSITY, ETHICAL SENSITIVITY, ETHICAL ORIENTATION TO ACCOUNTING STUDENTS PERCEPTION OF CREATIVE ACCOUNTING PRACTICES

Creative accounting is an ethical dilemma because it does not seem to violate the rules but causes users of financial statements to make wrong decisions. With the occurrence of various accounting scandals abroad and in Indonesia that has committed creative accounting actions, it is evident that there are still many accountants who violate the basic principles of professional accounting ethics and from creative accounting actions that have resulted in companies collapsing. This study aims to examine whether there is a relationship between ethical knowledge, religiosity, ethical sensitivity, and ethical orientation to accounting students' perceptions of creative accounting practices.
 The subjects of this study were students of higher education accounting study programs in West Java. The research method used in this research is quantitative with a questionnaire. The survey was conducted on 320 respondents of higher education accounting students in West Java. The analysis technique uses multiple linear regression analysis with SPSS software.
 The results of this study indicate that: ethical knowledge has a positive effect on accounting students' perceptions of creative accounting practices, religiosity does not affect accounting students' perceptions of creative accounting practices, ethical sensitivity has a positive effect on accounting students' perceptions of creative accounting practices, ethical orientation does not affect perceptions. accounting students regarding creative accounting practices. And simultaneously ethical knowledge, religiosity, ethical sensitivity, and ethical orientation affect the perceptions of accounting students regarding creative accounting practices as evidenced by the F value of 62.587> F table 2,4003 and a significance value of 0,000 <0.05.

The impact of creative accounting methods on financial reports and statements in commercial banks listed on Amman stock exchange (field study)

The aim of this study is to identify the impact of creative accounting methods on financial reports and statements in commercial banks listed on Amman Stock Exchange. Thus, in order to achieve this goal, the study utilized the descriptive analytical approach for its suitability to the nature of the study, also, the questionnaire was used as an assessment tool for this study. Meanwhile, among the most important findings of the study is that earnings management operations include many means and methods aimed at achieving specific purposes serving the management. Additionally, that commercial banks have practiced earnings management and creative accounting operations to a large extent during the financial years covered by the study period. And that the banking management is not aware of the impacts resulting from the operations of practicing fraudulent accounting and earnings management on the financial reports and statements, which greatly affects the reliability of the financial statements, makes them misleading and loses their quality, objectivity and credibility, therefore, affects the decisions of those statements’ users. The study has recommended the need to activate the governmental supervisory role as well as the audit committees in banks to limit the banks' practice of earnings management and creative accounting for the purpose of achieving the best degree of accounting information's quality and to provide it with each of trust and suitability, as well as the need to increase the effectiveness of the professional organization of accounting and auditing profession in Jordan. Also, to take the necessary measures to develop and enhance the competencies of its members, especially those who undertake auditing operations of banks' accounts to reveal earnings management and creative accounting operations and then working on reduce them. Besides, the necessity to expedite the activation of the governance rules' implementation, provided that it includes imposing penalties on the management of banks that practice creative accounting operations for the purpose of giving the published financial statements for these banks in the financial market each of confidence and objectivity.

A Study of The Structural Changes in the Accounting Environment as an Introduction to the Practice of Creative Accounting

A Study of The Structural Changes in the Accounting Environment as an Introduction to the Practice of Creative Accounting

Do IFRS Promote Transparency? Evidence from the Bankruptcy Prediction of Privately Held Swedish and Norwegian Companies

The purpose of our paper is to investigate whether any differences between International Financial Reporting Standards (IFRS) and local Generally Accepted Accounting Principles (GAAP) impact the transparency of financial reporting of non-listed companies through bankruptcy prediction. This contributes to extant research that has focused on the effects of IFRS adoption in the context of listed companies. For our investigation, we used logistic regression, well-established accounting-based predictors, and a sample of financial statements from privately held Swedish companies using IFRS, and Norwegian companies using Norwegian GAAP. The results indicate that financial statements made under IFRS may be better suited for bankruptcy prediction than those made under Norwegian GAAP. Our findings suggest that the use of IFRS could aid in increasing the informativeness of financial reports by promoting transparency and prevent managers of firms facing insolvency from engaging in creative accounting practices. Our results should, however, be applied with caution, as they may be due to the differences in characteristics across firms that are not captured by our research design. We leave this issue open to future research.

THE PERCEPTION OF ACCOUNTING EDUCATORS AND PRACTITIONERS TOWARDS THE PRACTICES OF CREATIVE ACCOUNTING

The study examined perception of Accounting Educators and Practitioners towards the practices of creative accounting. The study adopted descriptive research of a survey type. The population of the study comprises 187 Accounting Educators (academic staff) and practitioners at Afe Babalola University, Ado Ekiti and Federal Polytechnic, Ado Ekiti. The sample of the study was 60 respondents selected using a purposive random sampling technique. Questionnaire was the instrument used for data collection. Face validity of the instrument was ensured by the experts in the Department of Accounting. The reliability of the instrument was determined through a pilot-test conducted on the instrument. The reliability coefficient of 0.85 was obtained using the Cronbach alpha coefficient. The research questions were answered using mean scores and standard deviation and ANOVA test was used to test the hypotheses formulated at 0.05 level of significance. The study revealed that practices of creative accounting affect all the characteristics of accounting information as well as users' investment decisions and the integrity of the practitioners. In conclusion, accounting educators and practitioners indicated that creative accounting negatively affect the accounting information and the profession. Therefore, the study recommended that accounting bodies should take strict measures to curb creative accounting practices among accounting practitioners, to restore integrity and users' confidence in accounting information. Also, a monitoring group should be in place to check the draft of accounting information prepared by any organization this would be required to prepare a financial statement before being finally published for public consumption. KEYWORDS: Accounting Operation, Accounting, Auditing, Investment Decision, Financial Reporting

Corporate governance mechanisms and creative accounting practices: the role of accounting regulation

The rising cases of the high profile corporate failures in recent years have been a source of concern to all stakeholders. Thus, the public have become more critical about the effectiveness of corporate governance mechanisms in reducing creative accounting practices. In response to the public outcry, the new legislative initiatives and other reforms were introduced by the various countries. This study investigates the impact of corporate governance mechanisms on creative accounting practices in Nigeria following the enactment of Financial Reporting Council of Nigeria (FRCN) Act 2011. With a sample size of 70 firms, we examine the impact of corporate governance mechanisms on creative accounting before FRCN Act for the periods (2005–2010) and after FRCN Act for the periods (2012–2017). We analysed our data using regression and difference-in-differences estimator. The findings show that the effectiveness of corporate governance mechanisms in reducing creative accounting practices has significantly improved with the enactment of FRCN Act 2011. The study concludes that regulatory intervention contributes to effective corporate governance mechanism which invariably minimizes creative accounting practices. Our finding underscores the role of regulators which is germane in corporate governance activities. The result of this study provides practical implication in the areas of good corporate governance, corporate reporting and accounting regulation. Our work extends prior research on the subject of corporate governance, creative accounting practices and accounting regulation in emerging economies.

Creative Accounting Practice Among Public Limited Companies in Nigeria: Prevalence, Motives and Techniques

The study was to determine the prevalence of creative accounting practice, motive, and techniques employed among Public Limited Companies in Nigeria. The data obtained from professional accountants in public practice was analyzed using descriptive statistical techniques. All the respondents admitted to having encountered the practice among their clients in the course of their work as auditors. Officials’ gains and quest to gain stock market advantage was found to be the most popular motives for creative accounting practices among public limited companies in Nigeria. Fraudulent stock valuation and depreciation policies are the techniques mostly applied by the companies for the manipulations. Majority, seventy-two percent (72%) of participants admitted that creative accounting is either “totally legal” or “legal” if perpetrators simply exploit the loopholes in the standards, without being fraudulent and is rife among quoted companies in Nigeria and thus need to strengthen institutions regulating accounting.

Propensity to use global solutions of creative and aggressive accounting - in the light of accountants’ opinions

Research background: The processes of globalization contributed to the unification of accounting principles through their standardization and harmonization. However, there is rapid and frequent permeation of innovative and complex transactions and as a result, the area and scale of implementation of creative and aggressive accounting practices are increasing. There is also a new issue of forensic audit, whose task is to prevent economic crime by mainly detecting financial crime and fraud. A research field that requires deepening is the analysis of the perception, understanding, and propensity of accountants to adopt creative and aggressive accounting solutions and their attitude toward forensic audit. Purpose of the article: The main purpose is to analyze the degree of knowledge and adoption of internationally known creative and aggressive accounting solutions and to investigate the propensity of people involved in accounting to commit fraud. Methods: The article employed survey methods and techniques (within an accounting students’ group and among accounting professionals) as well as literature analysis, synthesis, and inference. Findings & Value added: The results indicate that the degree of knowledge of creative accounting is the highest among the issues considered. The most important factors influencing the propensity to commit fraud are pressures caused by third parties (in particular superiors), financial benefits, and the fear of losing a job. Knowledge of the issues of forensic audit is low. It is necessary to conduct promotional activities to increase awareness of the issues studied and to shape appropriate ethical attitudes among accounting professionals.

Possibility to reveal creative accounting when determining the value of the forwarding company’s assets

Procedures and methods for determining the value of a transport or forwarding company are different. The purpose of determining the value of the company, what results the company reports and also who performs the valuation has a significant influence on the choice of the method. In addition to various other influences, the expert must also take into account the possibility of the existence of interventions in the transport and forwarding company’s accounting. Creative accounting practices follow from the theory of accounting, but they record distorted economic changes in the company according to the wishes of various entities.The most common reason is the reduction of the tax base, but the rare case is, on the contrary, the artificial improvement of the achieved results. The aim of the paper is to analyze the procedures and methods for evaluating a company engaged in transport and/or forwarding and to examine the significance of possible interventions in the accounting of the company and the possibility of their detection by experts.

The Role of External Auditing in Reducing Creative Accounting Practices

The Role of External Auditing in Reducing Creative Accounting Practices

Impact of creative accounting on the company value: Empirical study for Slovakia

Research background: Procedures and methods for determining the value of a company are different. The purpose of determining the value of the company, what results the company reports and also who performs the valuation has a significant influence on the choice of the method. Purpose of the article: The determination of the final value of the company is influenced by many factors, economic, technical, specifics of the company and also the date on which the value is calculated and who performs the evaluation. Methods: In expert practice in determining the value of the company, we work mainly with methods based on property and income principles (asset method, yield method). The basic material for calculating the value of a company is the company’s accounting, which, however, can often be influenced. There can be several purposes for distorting accounting information (financial statements). The most common reason is the reduction of the tax base, or artificial improvement of the achieved results. Creative accounting practices significantly affect the structure of the company as well as its financial results. Findings & Value added: The main goal of the paper is to quantify a few examples, which will contribute to reducing the economic result. Subsequently, we analyse these interventions how they can affect the resulting general value of the company determined by the expert and whether the expert is able to detect them.

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.