Considerations on the Use of Creative Accounting in Distorting the Information in Financial Statements and

Author:Univ. Prof. Victor MUNTEANU, Ph. D., Associate Prof. dr. Marilena ZUCA

JEL:M41

DOI:

Keywords:creative accounting, financial statements, business performance, creative accounting practice, result modeling

Abstract:
Economic, legal and social developments, as well as pressure exercised by information users, has triggered accounting innovation, and therefore the development of creative accounting. \r\nSuch accounting has developed particularly in Anglo-Saxon economies, due to the accounting profession freedoms. It resides at the boundary between legal form and economic substance of transactions and events. Discussed in terms of accounting practitioners, the emergence of creative accounting was facilitated by the basic and alternative treatments used to solve the same problem. In most cases, an accounting problem has at least two solutions with different effect on the financial position and business performance. \r\nThe emergence of creative accounting has been influenced by the flexibility of international accounting standards. \r\nCreative accounting is treated, in most cases, negatively (negative creation), aimed at producing financial statements, able to meet the managers’ wishes on the financial position and business performance. In this way, the financial statements are not what they should be (normative discourse), but what is desired (interested speech). \r\n \r\n\r\n\r\n

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