scholarly journals Creative accounting in a global business environment

2021 ◽  
Vol 92 ◽  
pp. 02003
Author(s):  
Armenia Androniceanu ◽  
Lenka Strakova
Keyword(s):  
Graphical Representation ◽  
Balance Sheet ◽  
Accounting Information ◽  
Value Added ◽  
Financial Statements ◽  
Business Environment ◽  
Accounting Fraud ◽  
Global Business ◽  
Window Dressing ◽  
Creative Accounting

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).

scholarly journals Impact of creative accounting on the company value: Empirical study for Slovakia

2021 ◽  
Vol 92 ◽  
pp. 02001
Author(s):  
Eva Adamikova ◽  
Iveta Sedlakova
Keyword(s):  
Accounting Information ◽  
Value Added ◽  
Financial Statements ◽  
Basic Material ◽  
Tax Base ◽  
Company Value ◽  
Creative Accounting ◽  
Method Yield ◽  
A Company

Research background: Procedures and methods for determining the value of a company are different. The purpose of determining the value of the company, what results the company reports and also who performs the valuation has a significant influence on the choice of the method. Purpose of the article: The determination of the final value of the company is influenced by many factors, economic, technical, specifics of the company and also the date on which the value is calculated and who performs the evaluation. Methods: In expert practice in determining the value of the company, we work mainly with methods based on property and income principles (asset method, yield method). The basic material for calculating the value of a company is the company’s accounting, which, however, can often be influenced. There can be several purposes for distorting accounting information (financial statements). The most common reason is the reduction of the tax base, or artificial improvement of the achieved results. Creative accounting practices significantly affect the structure of the company as well as its financial results. Findings & Value added: The main goal of the paper is to quantify a few examples, which will contribute to reducing the economic result. Subsequently, we analyse these interventions how they can affect the resulting general value of the company determined by the expert and whether the expert is able to detect them.

scholarly journals The potential to reduce the risk of manipulation of financial statements using the identification models of creative accounting

2013 ◽  
Vol 61 (7) ◽  
pp. 2055-2063 ◽  
Author(s):  
Zita Drábková
Keyword(s):  
Explanatory Power ◽  
Accounting Information ◽  
Accounting Standards ◽  
Close Relation ◽  
Financial Statements ◽  
Economic Indicators ◽  
Accounting Fraud ◽  
Review Of Literature ◽  
Creative Accounting ◽  
Convenient Model

Explanatory power of accounting information is the key question for deciding of users of financial statements. A whole range of economic indicators is available to the users of financial statements to measure the firm productivity. When the accounting statements (and applied methods) are manipulated, the economic indicators may reveal clearly different results. The users of financial statements should have the possibility to assess the risk of manipulation of accounting statements in time considering potential risk of accounting fraud. The aim of this paper was based on the synthesis of knowledge from the review of literature, the CFEBT model analysis and Beneish Model proposing a convenient model for identifying risks of manipulation of financial statements. The paper summarizes the outcomes of possibilities and limits of manipulated financial statements and their identification. The testing hypothesis is assessing whether there is a close relation of a loss and an increase in the cash flow in 3–5 years time; whether the sum of the amounts for 3–5 year’s time would reveal the same results respectively. The hypothesis was verified on the accounting statements of the accounting entities of prepared case studies respecting the true and fair view of accounting based on Czech accounting standards.

scholarly journals Ways of Detection of Creative Accounting in a Global Economy

2021 ◽  
Vol 129 ◽  
pp. 03012
Author(s):  
Lenka Hrosova
Keyword(s):  
Global Economy ◽  
Accounting Information ◽  
Value Added ◽  
Financial Statements ◽  
Accounting Data ◽  
Creative Accounting ◽  
Economic Decision Making ◽  
Fair Representation ◽  
Accounting Principle ◽  
Source Of Information

Research background: Any entity operating in a global economic environment is required to conduct an accounting agenda in such a way that its financial statements are prepared in a clear, comprehensible manner and adhere to the accounting principle of fair and true presentation of accounting facts as it serves as a source of information for internal and other external entities using this information in its economic decision-making. It is the principle of accurate and true presentation of accounting information that plays an important role in the field of creative accounting, in which the accounting data is adjusted or manipulated to the desired form. Purpose of the article: The main goal of this paper is to point out the issue of creative accounting and the possibility of its detection using selected models. Methods: The methodological part is focused on the application of the Beneish model and CFEBT model assuming the use of creative techniques in the period 2016-2020. Findings & Value added: The summary of the results of the analysis thus points to the use of creative accounting in a given accounting entity according to the Beneish model and CFEBT model, but this accounting entity, despite its use, did not violate the principle of a true and fair representation of the accounting reality.

scholarly journals Creative accounting as one of the global tools for detecting fraud in Europe

2021 ◽  
Vol 129 ◽  
pp. 03024
Author(s):  
Monika Poradova
Keyword(s):  
Western Europe ◽  
Balance Sheet ◽  
Fraud Detection ◽  
Value Added ◽  
The Third ◽  
Creative Accounting ◽  
Method Analysis ◽  
Graphic Methods ◽  
Descriptive Method ◽  
Different Levels

Research background: The issue of fraud is a real and not an exceptional phenomenon in today’s global economies. Fraud arises in businesses at different levels and from different motivations. However, with the development of fraud, methods are also being developed to help detect such fraud. Therefore, the present paper focused on creative accounting as one of the global tools for detecting these scams. The present paper consists of four parts. The first part deals with the issue of creative accounting. The second part describes fraud techniques such as “windows dressing”, “off-balance-sheet financing” and “earnings management”. The third part of the article consists of an analysis of the development of fraud detection in Central and Western Europe. The third part also includes a discussion. The fourth part deals with the conclusions on the issue. Purpose of the article: describe the issue of creative accounting as one of the global tools for detecting fraud. One of the aims of this paper is also to analyse the development of fraud detection in Central and Western Europe. Methods: In the processing of the present paper, a descriptive method, analysis, mathematical and statistical methods, graphic methods, comparison and synthesis were used. Findings & Value added: provide an overview of the conditions for the creation of creative accounting, detection procedures, and the fight against creative accounting. The result of this article is a comprehensive view of the global frauds of Central and Western Europe.

The Effect of Accounting Manipulation on the Business Performances

2020 ◽  
pp. 168-177
Author(s):  
Ionica Oncioiu ◽  
Cristina Maria Ștefan ◽  
Valentin Radu ◽  
Georgiana Burlacu
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Fair Value ◽  
Economic Environment ◽  
International Level ◽  
Anglo Saxon ◽  
Accounting Systems ◽  
Dual Nature ◽  
Creative Accounting ◽  
New System

The dual nature of creative accounting has been intensely debated since its emergence in the Anglo-Saxon economies. The lack of a common accounting language, different accounting systems at international level, applied in different languages, international legislation harmonized more or less correctly, amidst a turbulent economic environment, left room for multiple interpretations and meanings. This chapter presents the advantages of fair value in manipulating business performances by creative accounting, but there are voices that are challenging this concept because of its volatility and tendency to subjectivism, and also manipulating the models used to evaluate balance-sheet structures or profit and loss account. The results show that fair value was introduced by accounting norms in response to the deterioration of confidence in the financial statements and targets a new system for assessing the entity's assets and liabilities.

scholarly journals Issues surrounding the classification of accounting information

2011 ◽  
Vol 12 (3) ◽  
pp. 353-369 ◽  
Author(s):  
Huibrecht Van der Poll ◽  
Daan Gouws
Keyword(s):  
Balance Sheet ◽  
Accounting Information ◽  
Financial Statements ◽  
Classification Theory ◽  
New Classification ◽  
Second Nature ◽  
Classification Framework ◽  
Income Statement ◽  
Current Classification

The act of classifying information created by accounting practices is ubiquitous in the accounting process; from recording to reporting, it has almost become second nature. The classification has to correspond to the requirements and demands of the changing environment in which it is practised. Evidence suggests that the current classification of items in financial statements is not keeping pace with the needs of users and the new financial constructs generated by the industry. This study addresses the issue of classification in two ways: by means of a critical analysis of classification theory and practices and by means of a questionnaire that was developed and sent to compilers and users of financial statements. A new classification framework for accounting information in the balance sheet and income statement is proposed.

scholarly journals Sprawozdanie finansowe – niedoskonałe źródło informacji o sytuacji finansowej przedsiębiorstwa

2009 ◽  
Vol 5 ◽  
pp. 176-186
Author(s):  
Maciej Tokarski
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Financial Situation ◽  
Creative Accounting ◽  
The Law

Balance policy is not only the art of making what is possible, but also the art of making itaccording to the law. Examples of this occurrences are known as: creative accounting, windowdressing, incomes smoothing, off balance sheet financing.The aim of the article is to show that financial statements can be imperfect source ofinformation about financial situation of the enterprise and possible the negative consequencesfor potential users.

scholarly journals Understanding the concept of profit as an economic information instrument: disclosure of semantic meanings

2018 ◽  
Vol 2 (1) ◽  
pp. 27-36
Author(s):  
Zarah Puspitaningtyas ◽  
Akhmad Toha ◽  
Aryo Prakoso
Keyword(s):  
Accounting Information ◽  
Value Added ◽  
Financial Statements ◽  
Point Of View ◽  
Structured Interviews ◽  
Intended Meaning ◽  
Semantic Level ◽  
Economic Information ◽  
Economic Reality ◽  
Economic Capacity

Accounting information presented in financial statements is likened to a set of symbols. These symbols are expected to represent certain realities, which are called semantic meanings. One of the symbols presented in the financial statements is profit. As a communication medium, the presentation of profits must be interpreted exactly the same as the intended meaning, so that accounting information becomes unbiased. The purpose of this study is to reveal the understanding of the concept of profit based on semantic meaning from the point of view of the accounting accountant. This study uses an interpretive qualitative approach. Data were obtained from structured interviews with informants, namely educator accountants in Indonesia with “mainstream and anti-mainstream” schools of thought. The results of the study reveal that the tendency has been a shift in thinking from educator accountants that originated from idealism to being pragmatic. The meaning of profit at the semantic level is not only materially interpreted. Although profit is used as an indicator of the success of the company, profit is interpreted as a representation of changes in the company’s economic reality. That, the meaning of profit reflects the company’s efforts to improve its economic capacity and its usefulness to the wider community. In other words, that profit is an economic information instrument that is expected to provide value-added to its users.

scholarly journals Creative accounting as a global tool for tax optimization

2021 ◽  
Vol 92 ◽  
pp. 02007
Author(s):  
Roman Blazek
Keyword(s):  
Slovak Republic ◽  
Value Added ◽  
Financial Statements ◽  
The Other ◽  
Analytical Models ◽  
Creative Activity ◽  
Economic Activities ◽  
Business Partners ◽  
Creative Accounting ◽  
State Administration

Research background: Creative accounting is a set of skills that allow people to produce an artistic, scientific or other creative activity that creates new, unusual and acceptable ideas, which are transformed into financial statements, which then form a positive view of the company’s economic activities. Purpose of the article: Creative accounting is a problem all over the world, as it adversely affects the financial statements in each country. The article describes models that help reveal the creativity of accountants and financiers. Procedures for identifying possible accounting delays are based on analytical models. In particular, it is complex statistical methods or data collection techniques that identify hidden, unusual patterns that indicate fraud. These analytical models are therefore used to detect various errors and fraud in accounting. Methods: Analytical models will be available to identify different methods of accounting abuse. Interest is placed on the analytical models of Beneish model and the Modified Jones model. The main objective of using these models is to reveal creative accounting in sector A - Agriculture, forestry and fishing. Fraud is investigated using sophisticated analytical methods that reveal improved data. Findings & Value added: Creative accounting in the conditions of the Slovak Republic but also globally is still not possible completely to reveal. The value added of this article can be mentioned as the benefit for potential business partners as well as investors interested in the analysed sector and the other hand for the other for the state administration.

scholarly journals KEY ACCOUNTING PROBLEMS RELATED TO THE STRATEGIES OF INTERNATIONAL TRANSFER PRICING IN MODERN GLOBALLY OPERATING COMPANIES

2019 ◽  
Vol 30 (1) ◽  
pp. 115-119
Author(s):  
Diana Petrova
Keyword(s):  
Information Needs ◽  
Transfer Pricing ◽  
Rapid Development ◽  
Objective Assessment ◽  
Accounting Information ◽  
Business Environment ◽  
Management Decisions ◽  
Global Business ◽  
Transfer Prices ◽  
Sound Management

This paper treats the role and significance of international transfer pricing in the activities of modern globally operating companies in the contemporary conditions of constantly increasing globalization of the world economic area. The main goals and tasks pursued by the mechanism of international transfer pricing in the hyper competitive, highly risky and dynamically changing global business environment are explained. The key accounting problems related to the processes of planning, analysis and control of specific strategies of international transfer pricing in the globally oriented companies are discussed. The rapid development of globalization processes in contemporary conditions determines the growth of the significance and application of international transfer pricing in the activities of modern globally operating companies. Increasing the degree of their economic integration and the amount of their intra-corporate exchange, as well as the increasing complexity of their international transactions, make international transfer pricing one of the most important and topical problem that is faced by these companies.The main goal pursued by the mechanism of international transfer pricing is to optimize activities and maximize overall profits for the company as a whole on a global basis. The accounting problems that may arise in connection with international transfer pricing in modern globally operating companies are in two main aspects:  problems in terms of information provision of the internal management processes that occur in the different subsidiaries and within the company as a whole;  problems in providing the necessary accounting information for the purpose of compiling the financial statements and satisfying the information needs of the interested external users. The accounting information system of globally operating companies should be able to meet the information needs of their distinctive uniform system of making decisions aimed at coordinating goals on a global basis, successfully implementing the global strategy and optimizing resources and results globally. The accounting must provide adequate information needed to make sound management decisions concerning the policy of international transfer pricing that is implemented, to control the implementation of these decisions and subsequently to assess and analyze the results. A key problem for globally operating companies is implementing such a policy of international transfer pricing that ensures optimal results for the company as a whole and at the same time successful practical implementation of the requirement for consistency of the goals of all units operating within the overall organizational structure. Considerable difficulties arise in the objective assessment of costs and benefits of the application of transfer prices in the implementation of numerous and diverse international operations between the different constituent structural units of the company and the making of sound management decisions based on this.

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