Creative Accounting Practices: Perception Gap Analysis among Users and Preparer of Financial Information

Abstract

This research explores the views of creative accounting practices and perception gap between the present and potential users and preparers of financial report accentuating on developing country perspective. Creative accounting is the misstatement of financial information being within the periphery of edict. Data were collected through a questionnaire survey to analyze the views of respondents. Optimization of benefit of the manipulators is the main reason of practicing this negative creativity for preparing company report. Respondents have significant perception gap about the overall view of this financial reporting and creativity of information. Lack of regulation, flexibility in regulation, discretionary position of management team and transaction timing will act as vital components of negative creativity. However, independence of external auditors and number of outside directors may lessen the use of creative accounting. As creative accounting is legal; strong, virtuous and ethical values are essential to reduce the implication of it.