Considerations Concerning the Impact of Creative Accounting on the Quality of the Information Presented in the Annual Financial Statements

Author:Univ. Prof. Neculai TABĂRĂ, Ph. D.; Alina RUSU, Ph. D.

JEL:M41, F30

DOI:

Keywords:creative accounting, accounting rules, annual financial statements, credibility, detection method

Abstract:
Handling the behavior of the accounting information users by providing them, through the financial statements, a company’s image that its managers want, does not mean necessarily breach accounting rules and regulations, but it can be done well within the law. It is the so-called creative accounting. This can be facilitated by gaps in accounting rules or sometimes accountants are oriented towards certain professional subjective judgments by the accounting norms. Creative accounting may serve different purposes depending on the interests that the company management has and its practice diminishes the credibility of accounting information, because it is made ​​a distorted representation of the firm reality. The objective of this paper is to identify the main creative accounting techniques and how they influence the information in annual financial statements, affecting their quality and reliability. To investigate the issue, the authors examined several definitions of the term, presented the main techniques for handling information and tried to offer some solutions for limiting the phenomenon.\r\n

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