Oditor, Vol. VI, No. 02/2020
ALTERNATIVE ACCOUNTING PROCEDURES, CREATIVE ACCOUNTING AND FALSE FINANCIAL REPORTING
Slaviša Đorđević[1], Nebojša Mitić [2]
Date recieved: 15.01.2020.
Date accepted: 22.05.2020.
doi: 10.5937/Oditor2002021D
UDK:
657.632
658.14/.17
JEL: M49
Abstract
Legislation and international professional accounting standards (International Accounting Standrads (IAS) and International Financial Reporting Standards (IFRS)) are the basis for the true and fair presentation of financial position of the companies. However, the existence of certain accounting transactions for which there are at least two, and often more permissible, procedures in accounting puts the accountants in the position that their subjective preference for a particular procedure may affect the amount of the periodic result to a greater or lesser extent. The (un)objectively determined result of a business entity is the main information base for its most important stakeholders (shareholders, managers, employees, etc.).
Given that there are different goals that these stakeholders want to meet, it is not uncommon for managers, in conjunction with accountants, to try to prepare financial statements in accordance with their goals. Creative accounting, with its techniques or methods, assists managers and accountants in preparing financial statements that are usually made in accordance with legal and professional regulations, but contrary to its spirit, which results in a financial and profitability position for a company that deviates to a greater or lesser extent from one that could be characterized as true and fair. For this reason, we have chosen to devote our attention to explaining the essence of creative accounting (accounting shenanigans), the possible impact of certain techniques on the balance sheet, income statement and cash flow statement, as well as measures that can help reduce its impact to an acceptable measure.
Key words: creative accounting, alternative accounting procedures, professional accounting regulation, shenanigans, false financial reporting.