Manipulating Business Performances by Creative Accounting

2021 ◽  
pp. 24-34
Author(s):  
Ionica Oncioiu ◽  
Traian Ovidiu Calotă ◽  
Alin Eliodor Tănase
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.

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.

Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

2015 ◽  
pp. 23-40 ◽  
Author(s):  
Francesco Avallone ◽  
Claudia Gabbioneta ◽  
Paola Ramassa ◽  
Marco Sorrentino
Keyword(s):  
Good Deal ◽  
Financial Statements ◽  
Cash Flows ◽  
Accounting System ◽  
Anglo Saxon ◽  
Accounting Systems ◽  
Ifrs Adoption ◽  
The Future

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are "interpreted" differently in different countries and that harmonization of financial statements has not been fully achieved yet.

suits of operations. The ordres were linked together either by double-entry or by the use of contra-accounts. The plan's double­ entry systems were as follows [CNOF, 1946]: Financial accounting Ordre 1 — Operating accounts (revenues and expenses) (accounting elements seen as causes) Ordre 2 — Balance sheet accounts (assets and liabilities) (effect of transactions on the company's position) Managerial accounting Ordre 3 — Cost accounts and sales accounts (transactions classified as to purpose) Ordre 4 — Imputation or contra-accounts Budgetary accounting Ordre 5 — Budgeted operations Ordre 6 — Budgeted liquidities Ordre 7 and 8 were left open, in case other accounting systems were developed in the future. Ordre 9 was devoted to commit­ ments and transitory accounts, such as purchases and sales in cash, and internal transfers. In financial statements, transitory ac­ counts were to be replaced by the ordre to which they were related (1 or 2), and commitments were to be listed at the end of the balance sheet. Each ordre was further divided into categories, each having its own specific meaning. For example, the categories found in ordre 1 were charges and revenues that are included in the gross profit margin, operating charges and revenues, investment-related charges and revenues, administrative charges, miscellaneous rev­ enues and financial charges. These categories were further grouped to provide the following summary accounts: the gross profit margin, results of operations, net revenue from investments, net administrative charges and financial charges. The classifica­ tion adopted in that ordre was based first on the economic func­ tion of the transactions and second on their nature. Another ex­ ample of the breakdown of an ordre into categories is provided by ordre 2. In the latter, assets were divided, according to their eco­ nomic function in the company and their degree of liquidity, into fixed assets, investments, short-term assets (inventories and short­ term investments), receivables and liquid assets (cash and cash equivalents). Ordre 3 and 4 were devoted to cost accounting, constituting a 287

2014 ◽  
pp. 343-343
Keyword(s):  
Balance Sheet ◽  
Financial Statements ◽  
Profit Margin ◽  
Financial Accounting ◽  
Managerial Accounting ◽  
Accounting Systems ◽  
Fixed Assets ◽  
Net Revenue ◽  
Specific Meaning ◽  
Double Entry

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 Analysis of Possibilities of Detectnig the Manipulation of Financial Statements in Terms of the IFRS and Czech Accounting Standards

2015 ◽  
Vol 63 (6) ◽  
pp. 1859-1866 ◽  
Author(s):  
Zita Drábková
Keyword(s):  
Financial Reporting ◽  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Statements ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Creative Accounting ◽  
Risk Detection ◽  
Accounting Unit ◽  
Comparison Of The Results

The main objective of financial statements is to give information. The diversity of interests and objectives of individual groups of users and creators of financial statements presents the risk of manipulation of financial statements in the context of true and fair view as defined in the national accounting legislation. The paper is concerned with the different possibilities of detecting the manipulation of financial statements in terms of the Czech Accounting Standards and IFRS. The paper analyzes the selected risk detection models of the manipulation of financial statements using creative accounting methods, off-balance sheet financing methods and accounting frauds in specific case studies of selected accounting unit in terms of Czech accounting standards. Based on the analysis and comparison of the results thereof, the paper presents and evaluates the alternatives of users of financial statements to evaluate the risk of manipulation of financial statements beyond the scope of a fair and true view. The evaluation further includes a comparison of uses of these models with respect to the International Financial Reporting Standards.

scholarly journals Sprawozdawczość finansowa i jej rola w rozwoju społeczeństwa informacyjnego

2009 ◽  
Vol 5 ◽  
pp. 172-175
Author(s):  
Grażyna Voss
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 ¿Ingresos integrales, teoría de la entidad o concepto de entidad? Un compromiso diplomático en la redacción de informes financieros

2017 ◽  
Vol 13 (25) ◽  
pp. 8
Author(s):  
Marco Angelo Marinoni ◽  
Andrea Cilloni
Keyword(s):  
Balance Sheet ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Accounting ◽  
International Accounting ◽  
International Accounting Standards ◽  
Financial Accounting Standards Board ◽  
Accounting Systems ◽  
Generally Accepted Accounting Principles ◽  
Income Statement

The globalizations of markets and increased international cooperation in the harmonized accounting systems have highlighted the difficulties inherent in the development of generally accepted accounting principles. The Financial Accounting Standards Board, FASB, and the International Accounting Standards Board, IASB, are therefore working - through shared projects – in conducting a “Conceptual Framework Project”, which will lead to increased knowledge and understanding of the principles of international accounting convergence.The process of international harmonization has defined the concept of “Comprehensive Income”, i.e. a new structure of the Income Statement, in which they reside clearly even charges and unrealized gains (as final assets adjustments, monetary exchange variations and so on). The Balance Sheet and the Financial Statements in general, continue to maintain an approach prone to theory of property valuation, given the shareholder, as the main carrier of social interest.

scholarly journals Analisis Penerapan Sak Etap Dalam Penyusunan Laporan Keuangan Koperasi ( Studi Kasus Pada KOPKAR PDAM Tirta Sanita )

2018 ◽  
Vol 4 (2) ◽  
pp. 075-083
Author(s):  
Hadi Nurdiansyah ◽  
Hendra Setiawan
Keyword(s):  
Balance Sheet ◽  
Field Research ◽  
Secondary Data ◽  
Financial Statements ◽  
Fair Value ◽  
Reporting Guidelines ◽  
Financial Statement ◽  
Historical Cost ◽  
Library Research ◽  
Descriptive Method

The purpose of this study is to analyze the application of IFRSs in the preparation of financial statements ETAP cooperatives, especially Cooperative Tirta Sanita. Analysis is performed to determine whether the financial statements have been applied by the Cooperatives is in accordance with GAAP ETAP set since July 2010. The analysis conducted in this study uses a descriptive method while selected data sources are secondary data from financial statements. The selected data collection procedures are obtained form library research, literatures, records, field research and interviews. The results showed that the Cooperative Tirta Sanita has been making adjustments in applying SAK ETAP in the preparation of its financial statements, but still not all the adjustments in the SAK ETAP have been applied in the preparation of its financial statements. This is evident with the availability of financial statements consisting of a balance sheet, profit/loss, change in equity, and cash flow statement. Cooperative Tirta Sanita using SAK ETAP with reporting guidelines still largely the same as before adopting IFRS GAAP General, therefor not too many significant changes occured. In other words, there was no significant effect happens on the application of GAAP in the financial statements Cooperative ETAP Tirta Sanita. Thus, financial statement reporting guidelines Cooperative Tirta Sanita with SAK ETAP is still using the principles of the historical cost method uses a different cost with SFAS General that is currently adopting IFRS using the fair value method. In general, this is the fundamental difference for the implementation of SAK ETAP.

scholarly journals Business Combinations of Czech Companies: Empirical Analysis of Their Typology

2018 ◽  
Vol 66 (1) ◽  
pp. 313-323 ◽  
Author(s):  
Jiří Pospíšil ◽  
Hana Vomáčková
Keyword(s):  
Czech Republic ◽  
Ownership Structure ◽  
Balance Sheet ◽  
Financial Statements ◽  
Fair Value ◽  
Descriptive Study ◽  
Business Combinations ◽  
The Czech Republic ◽  
Financial Position ◽  
Statistical Sample

This paper is a descriptive study which analyses company transformations - a subset of M&A - which took place in the Czech Republic in 2013. Based on the statistical sample containing detail data of 115 transformations, we analysed important aspects of company transformations (M&A) such as ownership structure of the participating companies, deployment of the effective date, acquisition date, balance-sheet date, date of registration and transformation project date, utilization of available forms of company transformations, utilization of financial statements for transformation purposes and incidence of fair-value revaluation. The results of the research shows, that majority of company transformations are in fact corporate holdings reorganisations rather than business combinations as defined by IFRS 3 and it also suggests that the rules for accounting for these transactions are in fact misused for distribution of earnings (even unrealized earnings) through the corporate holdings. We have also identified cases of severe distortion of faithful representation of successor’s company financial position, most often as a result of retrospective company transformations, where the effective day of the merger was put before the date of acquisition of the majority on target’s equity.

Corporate Governance as a Tool for Fraud Mitigation

2021 ◽  
pp. 1-15
Author(s):  
Antonia Maravelaki ◽  
Constantin Zopounidis ◽  
Christos Lemonakis ◽  
Ioannis Passas
Keyword(s):  
Corporate Governance ◽  
Accounting Standards ◽  
Financial Statements ◽  
Financial Fraud ◽  
Accounting Systems ◽  
Misleading Information ◽  
The Public ◽  
Creative Accounting ◽  
Profit Manipulation ◽  
Fraud Mitigation

Financial fraud through the falsification of financial statements is an evident problem. The restatement is enormous, and there have been developed many approaches to confront it. Profits manipulation has reached alarming proportions worldwide. The tendency of management to present a misleading image based on accounting weaknesses and gaps, to present accounting results as it wishes and not as it should according to the accounting standards, is essentially a key feature of profit manipulation. The executives' motives to falsify financial results and creative accounting practices have concerned researchers and their efforts to identify the necessary changes and improvements in accounting systems to protect the stakeholders and the public from misleading information.

Sign in / Sign up

Export Citation Format

Share Document