Department of Accounting and Finance, Technical University of Mombasa, Kenya.
Review Article
World Journal of Advanced Research and Reviews, 2024, 23(01), 2035-2043
Article DOI: 10.30574/wjarr.2024.23.1.2177
Received on 08 June 2024; revised on 18 July 2024; accepted on 20 July 2024
Creative accounting has become a widespread practice in financial reporting. It involves manipulating financial data to paint a more positive picture of a company's financial performance or position. This paper aims to provide a comprehensive exploration of creative accounting. It will delve into its underlying factors, characteristics, different forms, and associated Implications. By reviewing existing literature, we will examine the complex relationship between creative accounting and factors such as ethics, quality of disclosure, internal control, and ownership structure. The discussion will shed light on the double-edged nature of creative accounting, acknowledging its potential for innovation in accounting practices while also recognizing its negative consequences for stakeholders when used unethically. Various forms of creative accounting, including earnings management, income smoothing, and big bath accounting, will be examined in detail, with a focus on their impact on financial reporting transparency and stakeholder perceptions. Additionally, this paper will discuss the precautions associated with creative accounting, emphasizing the need for careful consideration in financial decision-making and the importance of
Creative Accounting; Income smoothing; Earnings Management; Aggressive accounting
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Charles Guandaru Kamau and Christine Kanana Murori. Characteristics of creative accounting: A Multifaceted Literature Analysis. World Journal of Advanced Research and Reviews, 2024, 23(1), 2035-2043. Article DOI: https://doi.org/10.30574/wjarr.2024.23.1.2177