Creative Accounting Essay Example | Topics and Well Written Essays - 3500 words

Creative story - Essay ExampleIt has been pointed out that conflicting interests of shareholders and managers often lead to the accustom of creating accounting. After having successfully assembled the resources, the participation is also required to assure all its stakeholders that it is indeed making good use of the resources in a manner benefitting all the stakeholders. In fact inventive accounting is done very much within the legal framework and the prevailing accounting standards, but quite often done to camouflage the positive picture. It wont be an exaggeration if we say that creative accounting is done with the help of the weaker points in the law of the land and the accounting standards. Creating accounting has also been termed as window dressing, aggressive accounting or fiscal gimmickry by analysts from time to time.People from outside the company as well as stakeholders from within the company make use of fiscal accounting elaborate to arrive at a decision regarding their decision to continue with the company or look for a better opportunity. The shareholders will go through the financial details in show to figure out the profit margins and percentage their own earnings in the form of dividends, interests or bonus shares. Some of the inferences that could be drawn using financial accounting information includeCreating accounting is therefore an effort to influence all these ind... v. Pointing out the lapses in utilizing the financial resources judiciouslyvi. Putting a stop to corrupt practices and different types of pilferages taking place within the organizationvii. Ensuring that the accounting practices are in tune with GAAPviii. Assessing the motive for further inputs in the form of finances, workforce or other resources for ensuring functioning of the organizationCreating accounting is therefore an effort to influence all these indicators in order to remain out of immediate trouble. Manipulation in maintaining the account books is one suc h practice, use of which by some companies has come to light, during the last couple of years. Accounting as such is used for maintaining the account of quantitative information about the transactions involving finances and resources of a company. In other words it is the process of identifying, measuring, manipulation and communicating the financial information about different economic entities for being used by the concerned parties. Showcasing healthy account books in the public ambit certainly helps the company and its management in attracting better reviews and commitments for the future growth of the company. This often results in managements resorting to creative accounting practices, which is mainly done to influence the popular opinion about the company and sometimes to conceal some unethical practices of the management or the company. Some of the widely used practices for manipulating the account books includeMaking use of the depreciation i.e. by profits can be inflate d by increasing the useful life of an asset and thus spreading the charge over a longer period of life. For example a company can spread over the useful life of its