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当“创造性会计”一词被表示出来时，很常见的是，头脑中的表面是操纵、不诚实和欺诈的想法。很明显，如果在使用创造性会计的时候出现任何错误，那并不是因为工具是错误的，而是要责怪用户。越来越多的公司通过采用创造性会计来避免灾难，也有许多公司可以通过使用它摆脱困境。如果创造性会计遵循道德和法律标准以及公认的国际会计准则（GAAP），它们可以给企业及其股东带来巨大的利润，或者帮助他们渡过艰难而富有挑战性的时期。此外，试图完全非法化它是不切实际的，并且限制了会计行业的发展。另一方面，教育会计人员的道德行为和提升专业精神可能是一个更好的解决方案。
Creative Accounting is usually depicted as a smeared subject and hence considered as an adverse deed. It is quite common that as and when the words “Creative Accounting” are indicated, the thinking that surfaces in one’s head is that of manipulation, dishonesty and fraud. It is apparent that if at all any error appears when resorting to Creative Accounting; it is not because that the tool is faulty, but the user is to be blamed. Progressively more companies have avoided disasters by adopting Creative Accounting and there are also numerous instances of companies which could wriggle out of adversities by using it. If creative accounting adheres to ethical and legal standards as well as the generally acceptedInternational Journal of accounting principles (GAAP), they can produce enormousprofits to the business and its shareholders or help strive through tough and challenging periods. Furthermore, attempting to completely illegalise it is impractical and narrows the growth of the accounting profession with such restrictions. Alternatively, educating accountants on ethical behavior and promoting professionalism could be a better solution.
In 2008, Hooper, Davey, Liyanarachchi, & Prescott has defined Creative accounting as a method whereby accountants use their understanding of accounting rules to manipulate the figures stated in the financial statement of a business. Basically it deals with various matters of conclusions and perseverance of conflicts between perplexing approaches to the presentation of the consequences of financial dealings and transactions.
In 2008, Hooper et al. opined that on a wider perspective creative accounting can be considered as worthy provided an accountant puts this tool in use with a judgement based on sturdy moral and ethical footing to objectively portray the performance of a company. Nevertheless, creative accounting can also be construed as an evil accounting exercise, as there are negative zones that permit literally ‘creative accounting’. A pertinent instance for this is the common practice of submitting a well looking report to the shareholders without violating the boundaries of the letter of the law (Hooper et al., 2008). The lack of rigidity within the criteria and law compromises probabilities for manipulation and distortion; activities that may be considered unethical by most of humanity.
In 1995, Breton and Taffler stated that it is a hard task for individual shareholders to distinguish the facts and the results of accounting manipulation because of lack of personal expertise, unresponsiveness or a reluctance to undertake a meticulous scrutiny. This botch on the stakeholders’ part is not a serious issue as far as the market proficiency is concerned. While concluding their research, Breton and Taffler opined that though there is certainly a scarcity of creative accounting strategies in the perspective analysts, the number of accounting professionals required is relatively low “for the market as a whole appropriately to process window dressed numbers”. However, in 1999, Healy and Wahlen backed with reports stated that creative accounting prior to equity issues does have an impact on share prices, vividly establishing that the potential investors do not necessarily take interest in creative accounting.
The major areas where creative accounting can make vital contributions are: governing elasticity, lack of rules, an opportunity for managerial judgment in respect of expectations about the future, the scheduling of some dealings, the use of simulated businesses and lastly the reclassification and presentation of financial results.
Accounting regulations normally allows policy options; valuation of asset is a good instance for it. International Accounting Standards offer a selection between carrying non - current assets at either depreciated historical or cost revalued amounts. It is up to the Business entities to change their accounting policies depending on the situation on ground. Schipper stated in 1989 that any change in policy is comparatively noticeable in the year in which it is adapted; but in the following years such changes may not be easily distinguishable.
There are several areas which are not amply covered by proper regulations. One good example for this is relating to accounting regulations for various stock options. No clear cut mandatory guidelines are set as yet in this area. Even in some of the developed countries such as Spain; accounting regulations in some areas are extremely scant. The crediting process and the size of the pension liabilities and certain norms for accounting financial instruments can be stated as some of the examples.
There is opportunity for managerial judgement for appraisal in discretionary areas. In 1988, Mc Nichols and Wilson took bad debts provision as an example and examined the discretionary and non-discretionary elements in it.
In order to render a good look to the accounts, the Management can decide upon the timing of even genuine transactions. For instance, if a company has made an investment at historic cost which can be vended for a higher price, being the current value. It is the prerogative of the managers of the business to opt as to which year they sell off the investment so as to show an increased profit in the financial statements.
Artificial business transactions may be incorporated to manipulate balance sheet amounts and to hobble profits between different accounting periods. This can be accomplished with the tacit connivance of a third party; such as banks, which is willing to enter into two or more correlated deals. A vivid example for this can be found in an agreement for selling an asset to a bank and then lease the said asset for the rest of its life span. The sale value under such a 'sale and leaseback' agreement can be inclined above or below the present value of the asset as the variance can be remunerated for by reduced or increased rentals.
These are poorly researched in the literature. In 2001, Gramlich et al. suggested that companies may manipulate balance sheets to reclassify liabilities so as to report a more rosy liquidity and leverage ratios. The presentation of financial numbers provides a distinct style of creative accounting that is based on cognitive reference points. In the year 2000, Niskanen and Keloharju described that “the idea behind this behaviour is that humans may perceive a profit of, say, 301 million as abnormally larger than a profit of 298 million”. There were many other studies such as one undertaken by van Caneghem in 2002 have clearly showed that some trivial fiddling of figures does happen in order to achieve some noteworthy landmarks.
In 2002 Naser and Pendlebury questioned senior business auditors about their involvement of creative accounting. According to them a substantial proportion of all types of companies use creative accounting procedures to certain magnitude. Several research studies scrutinized a specific aspect or practice of creative accounting. The entire studies confirmed that creative accounting using a precise technique. In 1976 Barnea et al. explained classificatory smoothing with the deployment of extraordinary items and their results, founded on a study of 62 US companies, indicate that classificatory smoothing does happen.
A large number of accounting appraisals and estimates are allowed by IFRSs. Thefeature of accounting estimates is that the amount considered for a preciseelement reflected on the financial statements is not an exact figure. Mulford and Comiskey (2002:64, 26) is of the view that the areas of flexibility within the IFRSs could indicate the areas of creative accounting. According to Baralexis (2004:440) since the IFRSs is an essential condition for creative accounting, there are two types of creative accounting - the legitimate and the illegitimate. It is very hard to differentiatebetween creative accounting and the realistic application of business judgement.
When all the aspects discussed above is taken into consideration, the very question automatically raised would be as to why flexibility is allowedwithin the IFRSs in the first place if the menace of manipulation of financialinformation is apparent. Healy and Wahlen (1999:366) opined that the financial statements are the best evidence for the knowledge of a manager about his company. They further stated that accounting standards should allow managers to make judgements and thereby conveying the necessary data to the users of financial reports which could possiblyenhance the worth of accounting.Mr. Arthur Levit, the former chairman of Securities and Exchange Commission (SEC) defends the practice of flexibility in accounting standards with the following observation:“Flexibility in accounting allows it to keep pace with business innovations.” (Levitt 1998:16).McBarnet and Whelan (1999:39) noted that in the UK, where the use of IFRSs is extensively prevalent toprepare financial statements, the emphasis is on principles rather than on rules.They maintain that doctrines are considered as the only means to seize the intricacy ofaccounting. |
