A Review of Creative Accounting Practices and Its Area, Technique and Ways of Prevention

Creative accounting has become very interesting topic recently. This is due to the increase of scandal that involves large companies worldwide. Despite the wide spread of creative accounting practices, the academic studies are still few. The areas, techniques, reasons, and prevention of creative accounting practices were varied. The purpose of this study is to review and integrate the literature to investigate the creative accounting practices and its area, techniques, reasons, and method of prevention. A total of 22 articles were reviewed and analyzed. The findings indicate that financial statements are the most violated and manipulated area by creative accounting practices. The most prevalent technique is the manipulation of information to the stakeholders and shareholders. In addition, the findings reveal that reason of creative accounting differ between private and public companies. Private companies use it to hide its income and reduce tax. While public companies use it to boost the price of shares. Ways of prevention found to be by implementing strict accounting measures or establishing ethical and behavioral commitment of professional accountant. Findings were discussed and direction for future work was given