DETECTION OF CREATIVE ACCOUNTING PRACTICES

This paper aims to describe the nature and causes of creative accounting by applying manipulative behavior to the preparation of financial statements and to explore the determinants that may encourage economic entities (EE) to mislead investors or shareholders throughout this process. A careful reading and analysis of the financial documents provided by the economic entities allows to observe and verify certain accounting data management operations. Recognition of revenue outside regulations, transfers of current expenses to future periods, overvalued assets and undervalued liabilities are the main transactions identified. By using these operations, professional accountants can modify the financial indicators of the economic entities. Measures that can be taken to combat or reduce these inappropriate practices are also analyzed.