Creative Accounting: From Creativity to Misuse

Mirdala, Rajmund; Mizdraković, Vule; Arežina, Nada; Stefanović, Danka

doi:10.15308/finiz-2014-5-7

Cited by 5 publications

(6 citation statements)

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“…researched practicing creative principles in Jordan. They found that the independence and integrity of auditors have a significant impact on their ability to identify the practice of creative accounting [15]. The research of authors Mirdala et al problem included a questionnaire survey, in which the task was to identify the boundary between positive and negative creative accounting.…”

Section: Resultsmentioning

confidence: 99%

Creative Accounting: A Short Literature Review

Straková¹,

Zvaríková²

2021

Advances in Social Science, Education and Humanities Research

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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.

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Section: Resultsmentioning

confidence: 99%

Creative Accounting: A Short Literature Review

Straková¹,

Zvaríková²

2021

Advances in Social Science, Education and Humanities Research

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“…Doubts regarding the validity of the ILASME in the sense of determining the creditworthiness of the legal entity are already supported by the information contained in the research (conducted in the period from 2009 to 2016) regarding the authenticity of the elements of quantitative analysis of the borrower [1], [28], [5], [14], [13], [23], [24], [28], [35], in terms of: (1) presentation of items in the financial reports (assets, calculation of depreciation, devaluation of receivables, revenues, operating cash flow, the achieved financial result and applied financial analysis), i.e. practice of purchasing an external auditor's opinion; (2) the motives for the previously described actions (such as handling, tax, bonus payments, ignorance).…”

Section: Research Resultsmentioning

confidence: 99%

“…The motives for such acts are mainly related to tax reasons (tax evasion) or to disbursement of bonuses to managers [28]. Furthermore, research conducted among accountants (2014) revealed that there is no clear boundary between the creative use of accounting techniques and their misuse ("creative accounting").…”

Section: Literature Reviewmentioning

confidence: 99%

Validity of investment loan approval model for SMEs in Serbia

Barjaktarović¹,

Pindžo²,

Barjaktarović³

2016

Ekonomika preduzeca

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SažetakMala i srednja preduzeća (MSP) su glavni nosioci ekonomskog razvoja. MSP investiraju sredstva u nove proizvode, nove tehnologije i osvajanje novih tržišta. Njihov krajnji cilj je da povećaju vrednost kompanije, odnosno, da obezbede profit za vlasnika. Predmet ovog istraživanja jeste objektivna analiza validnosti modela za odobrenje investicionog kredita malim i srednjim preduzećima (ILASME) koji najčešće koriste poslovne banke kada razmatraju da li će finansijski da podrže investicionu potrebu MSP klijenta. Cilj ovog rada je da ukaže na mogućnosti za unapređenje ILASME u domenu objektivnog donošenja odluke. Osnovna hipoteza istraživanja je da postoji sumnja u validnost/pouzdanost ILASME koji koriste poslovne banke u Srbiji. Primenom Pirsonovog koeficijenta korelacije će biti kvantifikovan stepen međusobne povezanosti ILASME i poslovnih performansi banke, odnosno indikatora kvaliteta aktive, poslovnog rezultata i kapitala. To će dalje uputiti na zaključak da uspešnost primene ILASME zavisi od usvojenih i primenjenih risk menadžment procedura, koje su predmet stalnog praćenja i unapređenja, uvažavajući kvalitativne karakteristike kreditora i korisnika kredita. I na kraju, proaktivno praćenje tržišnih trendova i fleksibilno unapređenje kreditnih procedura za upravljanje rizikom od presudnog je značaja. Ključne reči: MSP, investicije, analiza klijenata, analiza transakcija, novčani tokovi, risk menadžment AbstractSmall and medium enterprises (SMEs) are the main drivers of economic development. The SMEs invest funds in new products, new technologies, as well as in new markets. Finally, their aim is to increase the overall value of the company, i.e. to obtain profit for the shareholder. The subject of this research paper is an objective analysis of the validity of the investment loan approval model for the SMEs (ILASME) used by the commercial banks when considering whether to support financially an investment need of an SME client. The aim of this paper is to indicate the possibilities of improving the validity of the ILASME from the standpoint of validity for decision-making in this domain. The basic hypothesis of the research is that there is an objective doubt regarding the validity of the ILASME applied by the commercial banks in Serbia. By applying the Pearson correlation coefficient, the effect of the applied ILASME on the commercial banks' performance shall be quantified, i.e. the impact of nonperforming loans (NPLs) on the financial result and the equity of the bank shall be determined. Furthermore, it can be concluded that final success of the implemented ILASME depends on the adopted and accepted risk management procedures, which are the subject of permanent monitoring and improvement, as well as on the qualitative factors on the borrower and lender side. Moreover, permanent monitoring of market trends and improvement of credit risk management procedures are relevant.

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“…Balaciu et al (2009) consider this term as "transformation of the accounting figures from what they are in accordance with the economic reality into what the managers want." Mirdala et al (2014), argued that creative accounting could be positive and negative. Positive, creative accounting refers to the "beautification" of financial statements by actions that do not violate legislation, and it is also called "white" creative accounting.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Creative accounting can be defined as the use of procedures and methods to manipulate with balance sheet positions and their values in the financial statements to achieve different objectives. In this process, the knowledge of the accountant is crucial (Mirdala et al, 2014). Creative accounting is not a fraud, because fraud is defined as an "act of bad faith that violates the law," while creative accounting "appeals to accounting practices derivates from standard accounting practices" (Crenusca et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

Creative Accounting in Income Statement: the Case of Entrepreneurs in Serbia

Stašević,

Stavanović

2019

jwee

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Financial reports represent the main base for the decision-making process taken from users of financial statements. When financial statements contain wrong information, or they do not contain pieces of information at all, that can result in wrong decisions. Quality of financial reporting implies that the financial statements need to be compiled by with applicable legal, professional, and internal regulations. Creative accounting techniques include increasing or decreasing expenses, overstating assets, or early recognition of income. The primary purpose of this paper is to identify the existence of creative financial reporting and its main techniques used by entrepreneurs in Serbia. Considering the unique way of the financial reporting of the entrepreneurs in Serbia, in the paper were analyzed income statements from ten entrepreneurs containing men and women. The research included a horizontal analysis of the income statements, sales growth index, which shows the possibility of creative accounting among the entrepreneurs and the analysis of average financial costs for five years. The central hypothesis is the existence of creative accounting, but not to create or show better results, but to show worse financial results to minimize tax liability.

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Creative Accounting: From Creativity to Misuse

Cited by 5 publications

References 1 publication

Creative Accounting: A Short Literature Review

Creative Accounting: A Short Literature Review

Validity of investment loan approval model for SMEs in Serbia

Creative Accounting in Income Statement: the Case of Entrepreneurs in Serbia

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