Creative Accounting Determinants and Financial Reporting Quality: Systematic Literature Review

Abstract

Creative accounting is considered to be a 21st-century phenomenon that has received increased attention after the worldwide economic crisis and budget deficits, particularly the prevention and detection of accounting manipulation. Creative accounting is a practice that influences financial indicators by using accounting knowledge and rules that do not explicitly violate accounting policies, rules, and laws. The main purpose for implementing creative accounting is to show the financial position desired by the company management; stakeholders are informed of what the management wants them to perceive. Creative accounting can be used to manipulate financial information from its correct and accurate form by exploiting existing rules or, in many cases, ignoring one or more rules. Therefore, the methodology of the present work contributes to the existing literature by systematically reviewing the impacts of creative accounting determinants on financial reporting quality, especially in the banking sector. In this review, we describe and critically analyze previous relevant works to identify and assess the relationship between the constructs addressed in the study. In conclusion, this study offers insight for academia, researchers, and practitioners on determining creative accounting practices and their influences on fraudulent financial reporting between 2015 and 2020. Lastly, the present study contributes to the existing information by conducting new research on creative accounting determinants to enhance the quality of financial reporting and, therefore, help professionals to improve practices within the profession.

Implementation of Good Corporate Governance and Creative Accounting on Financial Reporting Quality

“…However, it is feasible to compare points of view that argue that determining accounting techniques that do not infringe on the Accounting Act or other associated accounting requirements is creative accounting rather than accounting fraud (Hrosova, 2021). Due to the collapse of several well -known enterprises and banks in the early 1980s, the focus began to turn to the expectation of fraud detection by auditors (Abed, Hussin, Ali, Nikkeh & Mohammed, 2020). Tassadaq and Malik (2015) uses empirical and critical methods to investigate the issue of creative accounting in financial reporting, taking into account not only the ethical obligations of creative accounting but also other aspects of financial reporting, such as the role of auditors, the impact of governmental regulations or international standards, the impact of manipulative behavior, and the impact of individual ethical values.…”

Planificación tributaria y su incidencia en la situación financiera de una empresa automotriz peruana

“…Variable independiente: Situación Financiera, de acuerdo con Abed et al (2022), la posición financiera se encuentra dentro de las necesidades de recursos y recursos crediticios (pasivos corrientes por hechos pasados) y patrimonio neto, conocidos como activos utilizados por la empresa (recursos útiles). De acuerdo con la implementación de este cambio, se dividió en cuatro partes, tipos de cambio financieros e indicadores de moneda y crédito; así como el nivel de liquidez (balance de operaciones, liquidez total y mantenimiento) y ratios de rentabilidad (rendimiento sobre activo, saldos y ventas).…”

Improving the Efficiency of Budgeting in Industrial Enterprise: The case of Russia, Italy, and the Middle East

“…Understanding the business's priorities requires having a well-organized, transparent budget. Furthermore, creating a budget presents chances for workers, encouraging them to participate in the enterprise's vision and compare and assess the budget with earlier financial statements, highlighting the company's strengths and weaknesses [6]. Although prior research has made a substantial contribution to understanding and examining budgeting efficiency [7], there is a dearth of literature addressing budgeting efficiency in the context of industrial companies.…”