The Impact of Creative Accounting and Fraudulent Financial Reporting on Investors Behaviour in the Nigeria Security Market: An Overview

Recent reports of high-profile company failures have cast the spotli ght on creativ E' accounting and ren ewed the call for published financial statements that show a full and accurate picture of a company's performance And position. Ira company fails to provide meaningful disclosure to investors about where it has been, where it is and where it is going, the value of the company may be eroded, and shareholders will lose confidence in the company Af1er the collapse of Enron in 200 I. creative accounting and fraudulent financial reporting have become issues of concern in the nation's llnancial environment. It is clear that the age-old profession of accounting owns its share of creative thinkers. It is also clear that no profession or occupation should be excluded tl·om creativity. Today's news is rift with case after case of mis-reporting of finrlllcial results. Many were a direct result of lim111cial managers taking advantage of "loop holes" in today's accounting standards. There are significant cases of accounting irregularities that resulted in landmark changes in accounting standards. There are weaknesses in today's accounting standards and this makes it easy to manipLilate figures. Every set of financial statements presents its own unique set of "Red-Flags" in accounting crimes. There is a need to knov.' how to review financial reports. identify signals of creative accounting and to equip investors and depositors so as not to loose their investment