Essay, Pages 2 (367 words)
there are good days and bad days, times of abundancy and recession in a company, in which the shareholders ‘ trust in the business performance is difficult to maintain. the incentive to engage in creative accounting methods is growing, and managers are drawn to ways to protect themselves in less favorable times.
. the expectation for the best outcomes and the highest bonuses defines one stage from which all the other issues begin. why we do not see creativity in accounting as something positive?”, “why do we do anything to stop it?” .
creativity is a red line in accounting growth, which can be seen from two different perspectives.. one, the positive side, is the root of change in the field of accounting and accounting profession . second, competitiveness, graphs and riches have been generated by the same business world. these are reasons of creative accounting’s gray side. subsequently, those motivations developed into objectives and tactics that contributed to various techniques. with regard to creative accounting approaches.
the ability to use creative accounting methods lies in six areas: regulatory flexibility, lack of regulations, management opportunities for future prospects, timing of certain transactions, use of artificial transactions, and reclassification and disclosure of financial information.. there is no point in calling for creative accounting or fraud: the results would be good, the bonuses and the share price would be high, and the financial activities would be consistent with the standards of both managers and consumers.. the appeal for innovative strategies must be explained and, among the reasons most frequently cited in the literature, we find: the possibility of obtaining certain tax benefits, access to loans or other similar facilities, meeting stakeholders ‘ expectations, maintaining share prices, thereby informing investors of the entity’s well-being, positioning the entity favorably in less favorable times. eventually, it is possible that if the reasons or motivations to use the creative strategies are connected with the advancement of company and not with the desires of oneself, this can be attributed to the ethics of creative accounts whatever the reasons given by the management of the company, these strategies should not be used under the auspices of “intent excuse the means” because they reduce accountable data quality..