CREATIVE ACCOUNTING

CREATIVE
ACCOUNTING

ISSUE AND CHALLENGE

DEFINITION EXPLAINATION

Accounting procedures that may (or may not) Optimise the necessary rules and principles
follow to accounting principles or standards in order to acquire trustworthy and high-
but depart from the goals of these principles quality financial information.
and standards in order to express the desired
corporate image

ISSUES OF

CREATIVE
ACCOUNTING Accounting ethics refers to
moral judgments based on
the values and decisions
that accountants face on a
daily basis in practise
The practice of creative
accounting raises
possibility of ETHICAL
concerns.

SITUATION

OF ETHICAL
6
ISSUES

4

ETHICAL ISSUES

Manager desire to show a profit growth
report that is consistent and try to
manipulate the data.

To sustain strong ethics, a professional
accountant must have a strong sense of
values, the ability to reflect on a situation
to determine the ethical implications, and
a commitment to the welfare of others

CHALLENGE OF

CREATIVE
6

ACCOUNTING

4

ASPECT OF Managers are required for high
MOTIVATION motivation for stipulation

follow standards while desire
manipulation statement

EXAMPLES To declare a decrease in business
PRIMARY income in order to reduce the
MOTIVATION OF amount of tax owed
CREATIVE
ACCOUNTING To meet internal targets, the
managers want to cook the books
for meeting internal targets set

Provide income smoothing
companies want to show steady
income stream to impress the
investors

CONCLUSION