Creative Accounting: A Short Literature Review

Abstract

In the professional literature, creative accounting is understood as legitimate, which means that it is not illegal to the extent that it does not violate the legislation of the country. Although it is a numbers game that can mislead internal or external users of financial statements, in some cases it can help protect a business from bankruptcy or other adverse conditions. This paper aims to represents creative accounting through various studies by authors dealing with the issue. The studies included in this paper provide insight into creative accounting, taking into account its origins, motives, tools, ethical approach, and its impact on financial reporting or the task of auditors in exposing creative techniques. This paper provides an overview of the period from 2000 to 2021. The study presented in this paper is an exploratory one, based on secondary sources of information.

Implementation of Good Corporate Governance and Creative Accounting on Financial Reporting Quality

“…Previous research has shown that creative accounting practices affect the financial reporting quality (Johl et al, 2013;Tassadaq & Malik, 2015;Blazek et al, 2020;Cooray, Gunarathne & Senaratne, 2020;. The goal of using accounting standards and ethics in financial reporting is to raise awareness inside the organization of the necessity to uphold moral principles that foster customer confidence in the company's services (Blazek et al, 2020;Lenka & Katarina, 2021). In essence, innovative accounting ethics procedures exist to assist external auditors in enhancing their effectiveness and precision in identifying fraudulent transactions (Johl et al, 2013;Aprilia, 2017).…”

“…In essence, innovative accounting ethics procedures exist to assist external auditors in enhancing their effectiveness and precision in identifying fraudulent transactions (Johl et al, 2013;Aprilia, 2017). Lenka and Katarina (2021) stated that six principles that indicate the maximum use of creative accounting practices are flexibility in regulation, scarcity of regulations, assumptions about the future, use of artificial transactions, timing, reclassification, and presentation of financial number games. Due to their lack of accounting knowledge and inability to conduct indepth research, most stakeholders need help recognizing or comprehending the financial numbers game's truths (Bhasin, 2016b;Christian & Julyanti, 2021;Hrosova, 2021).…”