Creative accounting in a global business environment

Abstract

Research background: The main essence of financial statements is a true and fair view of accounting because accounting information is an essential source of information about the company. A global business environment that provides scope for selecting existing accounting practices, different techniques, or different methods used in reporting may appear to be beneficial to the business and its accounting. Breach of the accounting principle of a true and fair view of the accounts through the intentional implementation of accounting errors or accounting fraud committed by responsible employees increases information asymmetry between creators and users of accounting information. Purpose of the article: The paper aims to point out the use of creative accounting in companies existing in the global business environment using a graphical representation of accounting cases using creative accounting techniques, namely Window dressing techniques, and Off-balance sheet techniques. Methods: In the paper is used the method of description and the comparison method based on which we compare entity that prepares the accountant statements in two variants A and B by using window dressing techniques and off-balance sheet techniques. The achieved results are presented in this paper using a graphical representation. Findings & Value added: Through the use of creative accounting techniques such as Window dressing techniques and Off-balance sheet techniques, our goal is to point out the possible manipulation of the company’s financial statements by performing accounting cases in terms of maximization variant (A) and minimization variant (B).