A Close Examination on Creative Accounting from Theoretical, Practical and Subjective Perspectives

Abstract: This paper is an outcome of a study of Creative accounting and International Accounting Standard. The study illustrates the extent of creative accounting practice, outlines the implementation of IAS, and examines the mutual interaction between creative accounting and IAS. Creative accounting could be seemed as a blessing or a curse. It is a blessing where the new techniques are introduced to refine the existent accounting system. It is a curse when the accounting scandals continuously emerging. But, in real world situation, creative accounting practice appears to be a curse rather than blessing, and therefore undesirable. In recent years, creative accounting is become increasingly popular running through companies. This study stresses the need for preventing, rather than stopping, the creative accounting practice by IAS wherever it exists. The paper recommends that IAS as the best choice, are enhance the quality of accounting information, however, it still contains many loopholes which provide significant opportunity for creative accounting. It also suggests that corporate governance, as the most essential part of accounting, are equal important to IAS, as they could restrict the occurrence of creative accounting. Fraudulent financial reporting, by misrepresenting the actual performance of companies should be considered serious and strengthen regulated. IAS and corporate governance exactly do so. However, creative accounting could actually drive accounting setter and corporate governance to improve by consistently challenging and warning them. Therefore, IAS and corporate governance could regulate creative accounting, where as at the same time creative accounting facilitates the development of the two